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7 Tips for Trade-Up Homebuyers

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By Marilyn Kalfus

5. Consider a lease-back deal.
In this scenario, the homeowner sells the property and then leases it from the buyer. The buyer becomes, in effect, the landlord. The seller now can buy their own move-up property with the proceeds of the sale, and without having to sell contingent on finding another home. “This method allows (the seller) to be the strongest seller and buyer possible while allowing them only one move and without the burden of carrying two mortgages,” said real estate agent Adam Brett of Fullerton, Calif.

Lease-backs are especially smart in the current, still aggressive, market, he said, while contingency sales are more desirable in a slow real estate market when decisions don’t need to be made as quickly.

6. Why not build your own?
Homebuilding is surging countywide, to levels not seen since the housing boom ended.

In addition to getting more space, move-up buyers don’t have to mess with renovations. Starting from scratch was perfect for Janet and Jerrold Son, who purchased a new, five-bedroom home at Montserrat, a community of 57 houses by Standard Pacific Homes in Brea, Calif. “That was one of the big reasons we wanted a new home,” said Janet Son, mother of two young children. “Especially having kids, we didn’t want to go through remodeling.”

Prices at Montserrat start above $1.2 million. So far, 37 houses have sold since sales began in March, said Laurie Massas, vice president of sales for Standard Pacific’s Southern California coastal division. The community is expected to sell out within a year.

7. Once you move up, stay put.
Homebuyers should let the economic dust settle and build equity over seven to 10 years, Mackenzie said. “A lot of homeowners have an expectation that the minute they close escrow they should be making money,” he said. But that’s not realistic, he said. Equity ebbs and flows. He said many short sales during the housing crash were done because people panicked, not because they really had to sell the home for less than what was owed on the mortgage.

“Even if they (buyers) buy right now and they slightly overpay, a seven-to-ten-year plan is going to protect them,” Mackenzie said. “(For) a two-to-four-year plan, they should consider a very conservative purchase, not as big or as expensive.”

And if the buyer sees a job transfer ahead or is approaching retirement? “They should buy only what they need,” he said. “Period, end of story.”

©2013 The Orange County Register (Santa Ana, Calif.)
Distributed by MCT Information Services

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