When the Market is Down – Trade Up!

By Raymond Stoklosa · November 19th, 2009

san mateo real estate

Is Now the Time for You to Trade Up?

For many San Mateo home owners with growing families or others enjoying income spiking career advancements, this question invariably arises: Is now the right time to trade up to a bigger, better San Mateo home? Answering this question for you requires some personal introspection and an understanding of how real estate markets work. Let’s take a look.

Will You Be Saving More on the New Purchase than You May Lose on the Sale?

If you’re situation is such that trading up – selling your current home in San Mateo and buying another – is a consideration, look at whether you’ll be saving more on the new purchase than you may lose on the sale of your current home. For example:

What Will it Look Like if Prices Drop 15%?

Suppose prices drop 15%, this is what it might look like should you decide to trade up.

	Current Home	New Home
Home Price	$600,000	$900,000
Sells at 15% Less	$510,000	$765,000
	($90,000) Loss	$135,000 Savings

The Most Important Number to Consider

The most important number is not what you paid for your current San Mateo home; the most important number is the difference between the sales price of the old home and the purchase price of the new San Mateo home. In the example above, if the value of your home has fallen by $90,000, but you’re in a situation where you can buy another home that meets your present housing needs for a positive “net” difference of $45,000, it may very well be the right time. The focus should be on acquiring greater value than the San Mateo home you currently own, improve your net worth and accelerate the growth rate of the value of your assets.

Savings on the New Home Can Offset Any Loss on the Sale of Your Current San Mateo Home

The savings on the purchase of a more suitable new San Mateo home can offset any loss on the sale of the existing house. Look at the difference between what you can expect to sell your house for and what it’s going to cost you to buy a new San Mateo home that better matches your housing needs and life style expectations. I expect you’ll find those numbers are much more meaningful unless you have no equity in your current San Mateo home. If you have no equity in your current home, selling is out of the question.

A Buyer’s Market is a Trade Up Market

In spite of the fact that your home’s selling price may be lower, the smaller loss realized at sale can be compensated by an even greater savings on the purchase of your replacement home. Remember, you have to be in the market to take advantage of it, or put another way…it’s a buyer’s market only when you buy.

Can the Loss of the Sale By Offset By the Savings on the New San Mateo Home?

If your family or job circumstances have changed – you’re expecting twins, your elderly parents are moving in, you need a superior school for your children, you want to live in a better neighborhood – the price you paid for your present house doesn’t really matter. Don’t worry too much about what you paid for your house; instead focus on whether the loss on the sale can be offset by the savings you’ll realize on the new purchase, while at the same time, capturing those things that you most want to change about your present housing situation.

By Focusing on What You Paid for Your San Mateo Home, You May Be Missing Out

Opportunity is not about the market, it’s about how you respond to it. If your decision to trade up is based your house being worth more than you paid for it, you may miss the best deal of your life. Take a close look at the “big picture” and you may be pleasantly surprised.

Considering Trading Up to a Bigger and Better San Mateo Home?

Check out our Buyer Representation Page to learn a little bit about how we work and how our Buyer Representation Program is All About You . Then, call us at (650) 655-2500 or email us at info@LivingWellinSanMateo.com to schedule a no obligation consultation and we’ll help you come up with a game plan to buy right.

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Raymond Stoklosa, Chela Stoklosa and Rebecca Williamson are Realtors with The RayChel Realty Group specializing in Santa Clara and San Mateo Real Estate.

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