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Upgrading In A Down Market

Upgrading

Do you have plans to upgrade in a Down Market?

Most home owners would sell their current property and upgrade to a bigger property in a rising market. This is not unusually where most home owners would be better off financially in a rising economy.  But do you know? You will be better off upgrading to a bigger property in a down market instead?

Let me illustrate with some example

Say if you plan to sell your $1 million property with the intention to upgrade to a $2 million property. A 10% increase in both properties mean that your $1 million property will increases to $1.1 million and that $2 million purchase will increase to $2.2 million instead. You stand to profit $100,000 when you sell your existing property. But you may have to pay up to $200,000 more when you purchase another property. Hence, you stand to pay $100,000 more in a rising market!

Alternatively, if you plan to sell your $1 million property in a down market. A 10% decrease in both properties mean that your $1 million property will decrease to $0.9 million and that $2 million purchase will decrease to $1.8 million instead. A 10% decrease in both properties mean that you could lose $100,000 when you sell. However, you could also stand to pay $200,000 less when you purchase another property. Hence, you stand to pay $100,000 LESS in a failing market.

Given that stamp fees and agent commission are based on a percentage of the property prices, the lower the price the less you pay too.

Does it make sense to you? Give me a call today if you have plans to upgrade in a down market.

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