“We would love to sell our home, but there is nothing to buy in this market.”
As a Broker in the greater Portland, Oregon area, I hear this all the time from empty nesters. Real Estate values are increasing at a historic pace, yet people are afraid to sell their homes for fear they will never find another one. The stories of bidding wars and houses selling within a day have created a fear of being a buyer.
Yes, it’s a sellers’ market, but things aren’t that bad if you are willing to employ the right strategy.
Here’s what I tell my clients. Throw away the old method of listing your home while simultaneously finding your next one. You are at a disadvantage when buying a house is contingent on selling. It puts you in a weakened position for negotiation and makes you a less desirable buyer when you’re trying to win the ‘bidding war’. And the limited number of listings available at any given moment puts even more pressure on you. It’s no wonder you’re procrastinating. Here’s the way to breathe easy, have some fun, and get the best deal on both the sale of your current
property and the purchase of your new dream home. Follow a three‐step process; Sell > Rent > Buy.
- SELL
Take the time to get your home in prime condition to get maximum value. Don’t even look at listings. Focus only on your current property. Enjoy the time and negotiating power you have
for completing a sale. - RENT
After you have a Sale Agreement, find yourself a place to rent. A 12‐month lease is typically required. You may pick a place near where you hope to find your next home to see how the
area feels to you. Or maybe you are thinking about moving into a townhome or condo for the first time. It would be smart to try that style of living before buying one. I know several empty nesters who thought this sounded great, and hated it after they bought one. You could even consider renting for a fun new experience like a downtown condo, a farm, or a floating home. - BUY
Once you have secured your temporary residence, it’s time to start researching the market for your new place. Build a list of criteria for the home of your dreams. You now have the luxury of taking several months to get the best possible property for the next stage of your life. Instead of the limited number that might be on the market when you sold your old home, you’ll have many listings to consider. Think of it this way; when you sell, and buy at the same time, there might be 30 homes available that match your preferences. The average listing is on the market for 30‐45 days. If you can wait, there could be roughly the same number of new properties to consider every month that goes by. Instead of a one‐time choice of 30 houses, you could have 300 to choose from while comfortably renting. I like to say you have a tenfold better chance to find your perfect place when you use the Sell > Rent > Buy Strategy.
When you find that dream home, you are a strong buyer, having no contingency on sale and flexible closing timelines that could be of value to a seller. You might say, “oh, but the hassle of moving twice”…. Or, “what if we find our dream home after only a couple of months and we are in a twelve‐month lease?” To this I say, your home is the focal point of your life and you are making a huge long term decision.Wouldn’t having a better chance of getting just the right place be worth the inconvenience of moving twice? And for a bonus, moving twice creates more opportunities to get rid of all the junk you don’t need!
The concern about breaking a lease early is not relevant in the big picture. Don’t make the mistake of thinking you are on the hook for the whole term. Most leases have a one or two‐month penalty for early termination. A small price to pay for a dream home. Another bonus is having time to move. Once you take possession of your new home, you don’t have to move in the same day. You have extra time to clean, paint, or even remodel while you still have your rental.
Finally, another source of procrastination is the belief that the hot market will go away before long. Everyone remembers the real estate crash of 2008 and many speculate that it may happen again, leading to lower home prices and more inventory. So, that’s when they think they will look for a new home. Wait a minute, could we be forgetting that the value of your house will go down and be even harder to sell if that happens.
2008 was an aberration brought on by a unique set of circumstances in the mortgage market. A lot was learned and it is unlikely that will ever happen that way again. Multiple reports put the long‐term home value appreciation in the range of 4.5%‐5.5% annually. The waiting argument doesn’t seem to work! Look at these trends provided by the Oregon RMLS as a great example. The average home price in 1992 was $100,000. By 2016 the average hit nearly $400,000. Similar ratios happened nationwide.
*Source: Oregon MLS/RMLS.com
This graph demonstrates how relaxed mortgage rules led to overpricing in 2005‐2008 which caused a market adjustment from 2009‐2012. However, the trend line shows how growth was steady at historic rates when you look at the years in total.
The likelihood of less stress, better financial results, and landing the home of your dreams is truly a possibility! The Sell > Rent > Buy strategy can work for you if you are willing to put in a little more effort and patience.
Tom Newton grew up and lives in Lake Oswego, Oregon. He’s made real estate part of his “Retirement Career”
Tom Newton
BHG Realty Partners
Oregon Licensed Real Estate Broker
P: 503.708.1218
