In this article I will share with you how you can gain from a down market. If you are a home owner and you are considering trading up, this market may by the best opportunity for you.

First let’s ask ourselves the following questions:

Do you think prices have dropped?
Your answer most likely is: YES!

Now,

Do you think prices will go back up?
I am sure you will agree with me, they will.

Over the years real estate continues to appreciate at an average rate of 3 to 6% annually.

If you agree with me, then please continue reading…

We all know that real estate is a long term investment. Let’s take a look at how we can take advantage of this incredible buyers market. Let’s take an example: You want to buy a bigger home – a trade-up scenario. But you are worried because your home has dropped in price. This may not be as bad a time to sell as it seems, since you would be able to obtain greater savings in the purchase of your next home.

Here is how:

Assuming that prices have dropped 5% (for simplicity sake)

The smaller loss at the sale of your property is compensated by greater savings at the purchase, resulting in a net gain. In this example when prices go back up you will end up with a net gain of $10,000. This kind of trade-up is often the exact same strategy employed by successful real estate investors. When you buy a larger and better home, you are saving more on the purchase than you may have lost on the sale of your previous home, and the new home is often better positioned for appreciation when the market rebounds. If we take the homes above and the market were to rebound in subsequent years and appreciate by 10 percent, the larger home would go up by $38,000 while the smaller home only would only grow by $19,000. Each trade-up move, over time, will help you improve your net worth and accelerate the growth rate of your financial bottom line. It is a proven strategy and one of the best opportunities of a down market.

If you wait for the market to rebound before you sell your home, then there will be no net savings when purchasing your trade-up home.