Jan
23

Trading up? Be prepared to wait

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You’ve decided to move up to a bigger or better apartment.  You have all your ducks in a row, credit score is near perfect, your broker is the best in the business, but you’re not getting anywhere.    Listings are scarce and credit is tight, so you end up sitting out because you can’t find what you’re looking for, have been outbid or you can’t get a good loan.

Two-bedroom apartments are particularly challenging since the market is shrinking in this area, according to Miller Samuel.  The available number of two-bedroom apartments is down by 28.4% from the same period a year ago.   This is largely due to low equity since the fall of prices in 2008; selling may not net enough extra cash to move to a bigger or better place at a price move-ups can afford.  The down payment requirements also come into play here as people need to dig for the cash to make their next move. 

Financing is another barrier to moving up.  Only the strongest borrowers with the best credit scores and income are being approved for loans with the favorable rates.  Others who are self-employed or receive a large portion of their income in commissions and bonuses are meeting resistance, and if they can get approved at all, the rates are appalling.  Without reasonable loans, buyers are watching their dream homes get snapped up by others.

It seems that contracts are being landed by the most aggressive buyers.  They are the first in the door at an open house and can make up their minds quickly.

Tips:

Consider a lease-back - making the sale of your current place contingent on the option of renting from the buyers for a few months to help you find a new place in a tight market.

Get in Early – be the first in the door at an open house.  Many websites like Douglas Elliman allow you to save searches and will send you an email for every new listing that meets your criteria.

Be prepared – Make sure all your paperwork is lined up including your mortgage pre-approval and your financials so you can make an offer on the spot.

Work with the right team – A responsive broker and real estate attorney can make all the difference in a hot market.

http://www.nytimes.com/2012/12/16/realestate/trading-up-can-be-hard-to-do.html?pagewanted=all

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