Monday Afternoon Fun

So my past client Dave wants to sell his two bedroom condo. He's going to use his equity and buy something bigger for his growing family. He called me Monday and asked when we could get this done. 

Doing my best impression of the world's worst saleswoman, I heavily discouraged this. Let's start with the basics. 

1. There are very few homes for sale. Even with the equity from his condo, that might not be enough to win a bidding war in today's market. So, if he sells, where is he going to live? Is he prepared for multiple offer bidding wars? Is his lovely bride? Do they have enough in cash reserves for such a thing? 

2. Dave suggested he could rent and wait for the next crash. Well, that's a possibility, but I'm not sure we are having another crash. Last time the market crashed, it was because of the inflated inventory. Currently, we don't have enough inventory. Sure, there may be a market correction sometime, but that will mean the prices stabilize, it does not mean that every home will be worth 130 percent less than today's prices. 

Plus, there are no homes for rent. I did a quick search for Dave while he and I were talking. On the MLS there were 42 homes/condos/townhomes/mobile homes/adult communities for rent in his price range. In fact, I went $100 over his price range, just to get 42. The first 12 of those 42 properties I sent him were in Cochise County.  That would be a long commute. 

3. Dave thought maybe he could buy a plot of land "somewhere" and just put a mobile home on it. A possibility for sure, but land isn't cheap right now either. Plus, Dave would have to come in with about 50 percent down for the land. And, he'd still have to get sewer and electricity to the land. I didn't even go into what it would take to finance a mobile home.  

I gave Dave some homework. First, talk with a lender and see what he actually qualifies for. If he can move without selling his condo first, he might have a better advantage and a place to live while all this nonsense is going down. Another option is a new build, but those are over his budget and I'm pretty sure he doesn't want an HOA. Second, if he wants to rent, stay on top of the rental market. These properties go very quickly. If he sees something for rent that he really wants, be prepared to put down $100 in application fees and he may not be the winning applicant. So, move quickly and jump. 

My best guess is Dave is going to stay right where he is. That's too bad. I know they could use more space and I wouldn't mind helping them buy something. But sometimes the safe option is the smart option.