Great Time to Buy a Home or Sell Another One

Mark Leader, a well-known trainer of Realtors, said, “The only time price matters is for the first home you buy and the last home you sell – everything in between is just moving your equity around.”

May 23, 2007 – Here is a great letter to the editor that appeared today in the Daytona News Journal. It is reprinted here with the consent of the author, Randy Maheux, of DeLand, Florida. DeLand is located in western Volusia County in northeast Florida.

As a licensed Realtor, I daily hear people complaining about declining home prices and how they “wished they had sold two years ago.” Media stories about our “declining market” haven’t helped. Yes, there are a lot of homes for sale today. Yes, prices are down from those in 2005. But the reality is, for most people, declining prices just don’t matter, and for some, they are an advantage.

Most people want to sell one home and buy another. Mark Leader, a well-known trainer of Realtors, said, “The only time price matters is for the first home you buy and the last home you sell – everything in between is just moving your equity around.” If you sell when prices are high, you also buy when prices are high; and if you sell when prices are down, you also buy at lower prices. On the surface then, current real estate prices are irrelevant.

However, when someone sells a home and buys a more expensive one, these rules of thumb are not true. Such people save money by selling and buying when prices are down. The reason why has to do with the difference between actual dollars and percentages. I’ll give an example.

Let’s say a person wants to sell his home and buy a bigger one. Yes, looking back at 2005, he could have sold for $100,000 but he would have bought the new home for $200,000, a difference of $100,000. But today, with prices down, say 20 percent for both homes, he can sell for only $80,000, but will have to pay only $160,000 for the new home, a difference of $80,000.

Since most seller/buyers are moving up, they are better off doing so now, rather than when prices go up. This is why I tell people, “Contrary to the gloom and doom of the media, this is a great time to sell, and buy!”

By: Randy Maheux

Source: Daytona News Journal