Expenses to sell and move.. $30,000 or more?

[RE Skeptic]

Originally Posted by Brandon Hoffman

RESkeptic: I can appreciate that opinion but I'd like to offer some real #'s from my market that I believe support my statement and you can tell me what you think. I'm speaking towards growing wealth although a home is a home first and not an investment.

Move up buyer sells a 125k home and buys a 200k home. Prices are down right now. If they wait and that 125k home appreciates to $135k but at the same time the 200k home appreciates at a similar rate at is now worth about 215k. So even though the move up buyer got 10k less on their home they came out 15k ahead by not waiting to buy which means they came out 5k ahead. I assume we can agree on that much so far.

In addition, if they are taking out a loan they are only having to borrow on 200k and not 215k. Rates are expected start to go up a little in 2013. I'll assume a 10% down payment at 3.5% IR on a 200k purchase now vs. a 10% down at 5% IR at 215k purchase price down the road

PI on the 180k loan at 3.5% is $808/mo.
PI on the 193k loan at 5% is $1038/mo.
Lets assume they live in the house 10 years since it was their move up home and they are saving $230/mo that is almost $28,000 saved in mortgage payments.

So bottom line if someone wants to move up right now they could potentially come out ahead 33k. Our market is beginning to turn around so I think that is pretty realistic. Hence, for most first time buyers, move up buyers, and investors it's better to buy now than wait in my market.

I was responding to your statement:

Move up buyers will come out ahead in the long run.

This is not a universal truth and implies that people who move up (to more house) will come out ahead of those that dont.

Your most recent post touches on the timing of when to “move up”. It argues that if you have decided to “move up” and the market is going to appreciate, you are better off buying now. While this it true in theory, it assumes that one can predict market appreciation. We all know this is impossible.

Realtors are a very optimistic group, at least with their clients money. I have never met a Realtor who didnt think that it is a “great time to buy”.

Have there been periods when you thought prices would depreciate?

If so, did you discourage your buyers from buying?

[MrRational]

Originally Posted by RE Skeptic

This is not a universal truth...

I was going to comment on your earlier criticism because I recognized this was your point.
just a heads up: This is an internet forum where people comment casually.

If your standard is to expect universal truths or unequivocal anything...
I suggest that you look somewhere other than the internet to find it.

But on the basis of the real estate industry... the comment in question:

Move up buyers will come out ahead in the long run.

is about as close to a universal truth as you're ever likely to find.

hth

[RE Skeptic]

Originally Posted by MrRational

I was going to comment on your earlier criticism because I recognized this was your point.
just a heads up: This is an internet forum where people comment casually.

If by "casually" you mean free and lose with the facts, I agree.

If your standard is to expect universal truths or unequivocal anything...
I suggest that you look somewhere other than the internet to find it.

But on the basis of the real estate industry... the comment in question:

“Move up buyers will come out ahead in the long run.”

is about as close to a universal truth as you're ever likely to find.

Try telling that to all the buyers who bought at the peak of the market in 2007-08. You know, the ones who lost their homes several years later and never even had a “long run”.

[Pragmaticus]

Move up buyers will come out ahead in the long run

Has a lot of built in assumption in it, which doesn't hold all the time. It even depends on how long that long-run is. Among them are the direction of real estate and interest rate, which are very hard to predict.

What some are trying to say is that mostly real estate holdings are highly leveraged and hence even small appreciating my yield profit. But if you happen to move up just before market crash, your down payment may be wiped out. Then you may need that "long-run" just to break even. If one is moving up buying cash, it may not come ahead than the one who stayed in his paid home and invest the money in the market, shall we say, in the same "long-run" period?

[shamrock847]

Sellers closing costs are part of the cost to sell

Buyers closing costs are not. They are just a negotiated reduction in the sales price because the buyer prefers to use less cash and have more financing. Selling a house for $240k with no buyers closing costs or $250k with $10k of buyers closing costs are the exact same thing to the seller. Usually they are the same to the realtor too since the commission is usually on net sales price.

[MikeJaquish]

Originally Posted by shamrock847

Sellers closing costs are part of the cost to sell

Buyers closing costs are not. They are just a negotiated reduction in the sales price because the buyer prefers to use less cash and have more financing. Selling a house for $240k with no buyers closing costs or $250k with $10k of buyers closing costs are the exact same thing to the seller. Usually they are the same to the realtor too since the commission is usually on net sales price.

Commission is on gross sales price where I live. So are tax stamps.
So seller can have small additional expense when paying buyer closing costs.

[rjrcm]

Originally Posted by MikeJaquish

Commission is on gross sales price where I live. So are tax stamps.
So seller can have small additional expense when paying buyer closing costs.

Same here (although we don't have tax stamps ). The only time I saw commission on net was for bank owned sales.

[Brandon Hoffman]

You guys seem to be getting into a lot semantics. It seems the OP really just wanted to know what sort of net they are looking at if they sell regardless of where the money goes.