I can't tell you how many times I have had this conversation in the past few months with my friends and neighbors here in Austin: 'Man, I would love to sell my house right now, but... where would I go?". It's true! This is a fantastic time to sell - competition is fierce and you can get top dollar and amazing terms. Let me share some ideas with you all, and perhaps we can chat some more if any of these resonate with you.
Move on up: We have some friends who have wanted to move to a larger house with room for a pool for a few years. They finally felt they were ready financially, but they were worried about the problem I just mentioned: they could get top dollar, but how could they compete for a new larger home? Putting in a contingent offer certainly wouldn't be competitive with cash. Here is what they did: listed their current home with a fairly aggressive (low) price. Buyers flocked and within a day they had an offer for cash, 10% over list, appraisal waiver and lease-back for free until September. Now they have cash in the bank and 4 months to shop for a new home!
Move on out: There is an old saying in real estate for first time home buyers: drive until you qualify. In other words, the farther from the city center you are, the cheaper real estate gets. That's generally true in Austin, too. If you're relatively central and you're like a lot of people who have experienced working from home during the pandemic, you may dream of a home with two offices or a pool. This dream could be a reality for you if you are willing to trade your current location for more comfortable living arrangements. If you are someone who won't be commuting to work every day any longer, it may make sense for you to head farther out into suburbia to get your dream house!
Make an investment move: So, you know your home value has shot up in the last .year, but you aren't interested in moving. Is there another way you can take advantage of this market? Yes there is! If you've been interested in investing in real estate, but don't have a 20% down payment laying around for your first property - you may now have it laying right under your feet. One way to access the increased value of your home is a cash-our refinance. Here is a quick example with some made-up numbers for illustrative purposes: say you bought your home 10 years ago for $500,000. You put $100,000 down and had a $400,000 mortgage. Now your home is worth $1,000,000 and your mortgage is down to $300,000. If your credit is good, you can borrow up to 80% of your home's value - in this case $800,000. Now, you will have a brand-new mortgage to pay for, but you will also have $500,000 in cash to invest in something else. If your new mortgage is 3.5% but you find something with a 7% CAP rate, you're harvesting the spread!
Get Creative: Another way to take advantage of this market is to use the land you live on today, potentially without moving. If your lot allows for it, you can build an Accessory Dwelling Unit (ADU) and rent it out. You could also move into it and rent out your old primary residence. You could even form a condo regime and sell the right to build an ADU to a developer.
All this to say - there ARE ways to take advantage of this market that you may not have considered. Work with a professional if you still have questions.
-RR