Premium sell/buy now, or sell/buy later? West Michigan

[Matt Kammeraad]

Hello Everyone!

I'm debating whether or not to sell my home and upgrade to a larger home.

I purchased my current home as a forclosure in 2011 for $63k. I put about $15k into it over the years. Now, I could sell it in a week, easily, for $145k. I owe $65k on it. After paying commissions, I could net $60k-$70k.

The new house I'm looking at is listed for $290k. I love the house. I've studied the West Michigan real estate market for several years now and I'm positive that this house is listed too high. I believe a fair price - even in this market would be $240k-$260k. Needs a couple of upgrades, but everything is move-in ready, on an acre lot, and has just about everything I'm looking for.

My plan is to wait about a month and submit a low-ball offer of $240k. By then, if the house hasn't already sold, the price will most likely have dropped to $280k. Assuming the sellers want to SELL the house, let's say we land on $265k.

The dilemma is... $265k is a decent price for this house in TODAY's market. No one knows what's going to happen even in the near future. Interest rates are amazing right now, and they could be horrible in a few years.

I'm afraid that if I buy this house at a premium (what I think is $25k-$35k over priced), that the market will calm down and return to where it was in 2013-2015. The house value drops to $220k-$230k, and all of a sudden I have negative equity.

THE QUESTION to you is: Should I remain in my current house and see what the market does, OR, should I jump on this larger house (take advantage of today's rates) and hope the market at least remains where it's at?

If I buy the larger house, I don't plan on moving within the next 5 years.

Thanks.

[Joe Barnett]

Hi Matt. I was in just about the same situation as you are now a couple months ago. My wife and I bought our house in 2012 for a similar price. We've been here for a few years now and wanted to move to a bigger house with at least 5 acres. After searching for about a month we found our dream home! We were so excited about it, we made an offer they countered and then we accepted. We got an inspection on the house and it came back with a few thing that needed to be fixed before we went along with the purchase. So we tried working with the seller and they didn't want to fix anything. Now we had to think if we really wanted to go thru with the purchase. During that time we started to think if we go thru with this house were not going to be able to continue to invest because it will cost a lot more at this new house for a mortgage then the house were at right now. Time to decide. Well we ended up passing on the house and are staying at our home we bought in 2012. After we decided that we began to look for another income property which we just closed on last week. The point of my story is I would take a look at the bigger picture do you want the bigger house or maybe stay at the smaller one so you can invest. I know everyones situation is different but thats just my thought.