The goal of investors in the stock market is to “Buy low—sell high!” The same philosophy can work when buying or selling a home too, but there is a difference. Stock investors may buy at will when prices are “down” and sell when they are “up,” while you are not usually free to choose whether the housing market is “up” or “down” before buying or selling a home.
In all likelihood, your purchase is predicated on some event, like a job transfer or an addition to the family. A similar event may also prompt you to sell your home, based on a time frame over which you have little control.
Historically, real estate has risen in value. It has also experienced up and down cycles, lasting from 3-10 years depending on the geographic market. If you purchase your home during the “down” portion of a cycle, and sell during the “high” cycle, a sizeable profit may be realized.
Conversely, you may have to purchase just as homes reach the peak of a cycle. This doesn’t mean you’re paying too much, but only that you pay the going price in that cycle. If you sell your home a few weeks later, you may find that prices are at the lower end of the cycle, possibly resulting in a loss.
Either way, the value of your home today is whatever a ready, willing and able buyers are paying for similar homes in your area. This can be determined by asking a real estate agent to perform a “Competitive Market Analysis.” The results can help you make an informed decision about the value and sale of your home.
PDF Download: Can You “Sell High”?
Note:This article was originally published on this site on March 21, 2012. It has been updated reflect the current home market.