Smart Moves by Ellen James Martin

Pointers for Homebuyers With Trade-Up Aspirations

A retired army officer of 84 was thrilled recently with a couple of real estate transactions that allowed him to sell his 1980s era multi-level house for a strong price and then move up to a much newer place loaded with luxury features.

"He sold the old house at lightning speed and -- using all his equity -- bought a bigger, fancier one-level place that spares him the need to climb stairs. He couldn't be happier with the change," says Sid Davis, the real estate broker who represented the man.

The good news for sellers such as the one in this true story is that demand for property, such as the affordable multi-level place owned by the retired army officer, is very strong. But the bad news for those seeking to use the equity they've built up is that they, too, often face rival bidders in their pursuit of a more desirable home.

"Inventories of homes are very tight right now. That's because many owners are sitting tight out of fear they won't be able to find an available home they like better. There are shortages all the way up the line," says Davis, the author of "A Survival Guide for Buying a Home."

One explanation for the severe housing shortage is that there is relatively little new home construction underway. Meanwhile, many millennials -- those now in their late 20s to 30s -- are coming into their prime home-buying years.

"Inventory has been falling for years with supply no longer meeting demand," says Svenja Gudell, the chief economist for Zillow, the real estate database company (

Ron Phipps, a real estate broker and former president of the National Association of Realtors, says many move-up hopefuls are late-marrying couples age 30 to 50 who need more space to house their young children, along with young couples living in condos or apartments who hope to move to a nice suburb and start a family.

But as Phipps points out, few upwardly mobile people are willing to sell their home unless they're confident they can locate a better property. That's why he says it's important to check out the market before letting go of your current place.

Here are a few pointers for prospective move-up buyers:

-- Survey the new home market for potential move-up options.

To be sure, real estate markets are hugely variable. But one generalization seems to apply in many areas: some of the best deals are available in brand-new upscale subdivisions.

"Granted, there's not a tremendous amount of new home construction going on right now. But there are always builders out there who need to unload some houses to cover payments on their bank loans. This is most likely in new subdivisions at the upper end of the price spectrum," Davis says.

-- Look for a place with strong, long-term resale potential.

Many people on the lookout for a move-up property assume their next home will be the last one they ever buy. Yet the majority of homeowners sell sooner than anticipated, often by several years.

No matter how long you stay, you'll want a place that holds its value and eventually appreciates. That's why Phipps says it's smart to look for features that should gain value over time, like those that keep energy bills to a minimum. Look for a home with extra attic insulation, energy-efficient windows and high-efficiency appliances.

He also encourages buyers to consider a property's proximity to public transit and amenities reachable on foot. He suggests looking for open floor plans that will retain their popularity rather than homes that are chopped up into small, self-contained rooms in the common areas.

-- Consider buying an "over-improved" house.

A surge of home improvement work in recent years caused many owners to go to extremes. Drawing on easily available home equity credit lines, some spent lavishly to upgrade their properties. In doing so, many created what real estate specialists call "over-improved" homes, meaning they outstrip neighborhood standards.

For example, some owners added a fourth or fifth bedroom, even though they reside in areas with modest, three-bedroom homes. Or they overhauled their kitchens with expensive custom cabinets made from such woods as zebra or mahogany, though their neighbors have run-of-the-mill cabinets.

When first they venture into the market, the owners of an over-improved home typically strive to recoup every penny they've spent. But after their properties have languished unsold for an extended period, most are humbled into price cuts.

Once the discounts have been taken, over-improved homes are often well priced.

"Sometimes the over-improved house is the best value out there for your money," Phipps says.

But he cautions that move-up buyers should rule out any over-improved home located in an undesirable neighborhood.

"To identify the best possible neighborhood and house to buy, count on expert advice from a strong local real estate firm. There's no substitute for that," Phipps says.

(To contact Ellen James Martin, email her at