The Cost of Waiting

One price quite often forgotten when selling your house and buying a new home is the "change over" cost.

Many people only focus on the price they can get for the house they sell. This often results in statements such as "We won't sell until prices go up".  Unfortunately, this can often cost you thousands of dollars.
 
The majority of people who move are "trading up".  This is, they sell their house and buy a more expensive one.  Perhaps they are moving from a home unit to a house, or perhaps they can now afford the extra luxury of a waterfront or a great water view.
 
Whatever the case may be, trading up involves the injection of extra capital in order to acquire a more valuable property.  The all important "change over" cost is this amount of money you need to add to the value of your existing house so you can buy the new one.
 
For example, if your house is currently worth $200 000 and the one you want to buy costs $300 000 the changeover cost is $100 000.
 
However, if you wait for property prices to go up, by say 10%, your house would be worth $220,000, but the house your want to buy would also go up by 10% and would now cost $330,000. The changeover cost would now be $110 000.
 
By waiting for prices to go up your changeover cost has risen from $100 000 to $110 000.  It has cost you $10 000 to wait.
 
Instead of sitting in a house you plan to leave, waiting for it to go up in value, it might be better to move up to the home you love - then watch its value go up.