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7 tips for trade-up homebuyers

By By Marilyn Kalfus

The Orange County Register (MCT)

Published: Thursday, Oct. 31 2013 11:05 a.m. MDT

If you’re on the hunt for a new home, you don’t want your old home languishing on the Multiple Listing Service. “Unless you’re in an ascending market, which we’re not in right now, you want to get sold in 30 days,” said real estate agent Mac Mackenzie of Coldwell Banker Residential Brokerage in Irvine, Calif. “Homeowners who want to sell their homes now have an 80 percent better chance because competition is going to be less at the end of the year. Selling at year end can be more profitable to a lot of sellers … and buyers are more serious at the end of the year.”

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 Prudential California Realty in 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.

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In the past year, builders have launched more than 50 new-home projects in Orange County, Calif., alone, according to MarketPointe Realty Advisors of San Diego.

Business has been brisk. A dozen families camped for a week outside the sales office at the Brightwater project in Huntington Beach, Calif., waiting for a chance to place orders on the next phase of new homes. Starting prices for that development’s cheapest project — Capri — jumped from $800,000 in March to $1.4 million last month. At the recent grand opening for Pavilion Park in Irvine’s Great Park Neighborhood, a fleet of golf carts and a trolley whisked around thousands of shoppers.

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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.”

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©2013 The Orange County Register (Santa Ana, Calif.)

Visit The Orange County Register (Santa Ana, Calif.) at www.ocregister.com

Distributed by MCT Information Services

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PHOTO (from MCT Photo Service, 202-383-6099): REAL-TRADEUP

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