The Move-Up Buyer


If your family is growing, you’re earning more money than you were five years ago, you want to live in a more desirable neighborhood, or you want a larger or better-appointed house, interest rates are at an all time low, you might be considering selling your house and “moving up.”

Per Zillow, the median price of homes currently listed in the United States is $274,500 while the median price of homes that sold is $238,700. But home prices and sales are uneven across the country. In most areas, prices have increased and in others (particularly metro areas) prices have skyrocketed. Foreclosures will be a factor impacting home values in the next several years. In the United States 1.6 homes are foreclosed (per 10,000).

Meanwhile, the NAR, in its “2017 Profile of Home Buyers and Sellers” report, says 34 percent of the buyers were first-time buyers a decrease from 35 percent in 2016. New home buyers were at 15 percent and is historically low when compared to 29 percent in 1989. Buyers who purchased through a real estate agent was 87 percent which is higher than 82 percent in 1981. The age of the typical buyer rose to 45 in 2017. Compared to 1981 when the average buyer was between 25-34 years of age.

Tips For Potential Move-Up Buyers…

move up buyersThere are a host of things you should do as you consider whether now’s the time to move up, including:

  • Keep your options open. If you wanted something fairly new, think about something a few years older. Many ‘older’ homes have been refurbished, turning them into desirable properties for either new or move-up buyers.
  • Get an accurate picture of your financial situation. Get pre-qualified through a Lender before you start your home search. Lenders generally say your mortgage should be about 25 percent of your gross monthly income. And always factor in some reserve savings to put aside each month.
  • Be realistic about how much you can sell your house for and how much of the proceeds you’ll have available for a down payment on your next house. Ask your REALTOR® for a market analysis. And don’t forget closing costs — points, which are extra fees paid to secure a lower interest rate, origination fees, taxes, title insurance, and financing costs. The higher your down payment, the lower your monthly mortgage payment and the possibility of qualifying for a better loan. Freddie Mac says you should expect to pay about two to seven percent of the cost of the property.
  • Be specific about your needs and don’t cater to emotion. If you have two kids with another on the way, be on the lookout for houses with plenty of bedrooms and areas to entertain and raise growing children. Take play and study spaces into account.
  • Consider the neighborhood, as well as the individual house. If you have kids, check out the reputation of the schools that your kids would be attending. Contact the local police or sheriff’s department to get an idea about crime activity in the area. And factor in the neighborhood’s proximity to work, shopping, restaurants, and other important places you’ll be frequenting.

If you’re considering an existing house, check out the property’s insurance history. This could affect your ability to obtain insurance if you buy it. Begin by making sure your credit report is accurate — credit histories are sometimes used to determine whether a company will insure you, and, if so, at what rate. Also, the Insurance Information Institute says you should get a copy of your loss history report, such as a CLUE report from ChoicePoint or an A-PLUS report from Insurance Services Office. This is a record of home insurance claims you have filed. If you have not filed any insurance claims in the past five years, you won’t have a loss history report. The better your report, the better chance you’ll have of obtaining reasonably-priced insurance on the house you buy. Ask the seller to provide a copy of their history report, too.

If you have any additional questions on move-up buying, feel free to contact me. I will use my knowledge and expertise of the area to help you make the right choice.