How To Trade Up
by Jim Scott

One of the main reasons there are so few homes to buy in the 92103 zipcode is the lack of homes for sale. This is not circular reasoning; sellers are loathe to list when they think it will be difficult to obtain a replacement home. The purpose of this article is to discuss some strategies that may help if you in this difficult process as well as provide a market report. 

First, A Market Update 

The 1999 market is performing in a manner remarkably similar to the past two years. Inventory peaked in the summer of 1997 and bottomed in March of 1998. It then hit a new high during the summer of 1998. Inventories then fell until March of 1999 before increasing. 

The number of homes for sale is now rising along with prices. If the pattern established over the past two year holds, buyers should have more homes to choose from albeit at higher prices.

If you are a buyer, you must be patient. Get a good agent and be prepared to wait. Markets, to be sure, are not always consistent but I still believe buyers should wait if they have that option. The current imbalance of buyers and sellers is very pronounced.

If you are thinking of selling, you should do it now. Prices are being bid up at even higher levels than last Spring.

Trading Up 

Trading up is always a chicken and egg question. I believe you should sell your existing property first. You can then negotiate from a position of strength. No one wants to move twice nor is it necessary. First, try to negotiate a rent- back provision in the contract. Make it attractive to the buyer. Ordinarily sellers should pay the buyer's actual carrying costs during the period the sellers rent their former home. Insist on a deposit "pass-through" or some language in the contract that removes all contingencies, including financing, within 20 or 25 days from acceptance. Try and negotiate for a rental period of at least 120 days after the close of escrow. (Some lenders may not approve the arrangement. Call me for details.)

If the buyer is unwilling to rent back the premises, you can always opt for a long escrow. Have the deposit increased when all contingencies are removed. This should be done within 30 days of acceptance. All parties, agents included, take additional risk in this type of arrangement. Call me for more details.

It can be easy in this market to find your new home and then sell your existing home. You will have less leverage in the process, particularly if you need to sell your existing home. You are then at a negotiating disadvantage on both transactions. 

In the ideal world, you should have enough cash to purchase your new home without selling your existing residence. If you do not, there are many other strategies that you could follow. Space prevents me from discussing all of them, but feel free to call on me for ideas that may facilitate your move. 

You can reach Jim Scott by email or at his office at 1111 Fort Stockton Drive. Jim's direct line is 885-9511. Jim has been a homeowner in Mission Hills since 1976. Scott & Quinn is the oldest full service real estate company in Mission Hills. There is also a professional property management team on staff.