For those fortunate enough to be secure in their employment and finances, the current housing market is very appealing. But for current homeowners who are looking to move up, things can be a bit more challenging right now than for those who are buying for the first time.

Current homeowners, of course, don't get the benefit of the $8,000 tax credit that's been generating so much interest among first-time homebuyers. Both can take advantage of the current combination of low housing prices and interest rates. But repeat home buyers face some obstacles right now that first-timers don't have to worry about.

The first of these is that they're typically going to have to sell their present home in a down housing market. That not only means they're going to get less for their current home than they may have previously anticipated, it's going to take longer to sell.

Depressed market can complicate appraisals

Foreclosed and distressed properties in an area can also have a greater effect on homeowners seeking to move up than on first-time homebuyers, according to Marla Martin, communications director for the Florida Association of Realtors. In addition to reducing the value of the current home one's trying to sell, she said, they can also complicate the process of obtaining the appraisals needed to sell the old house and buy the new.

If the appraisal on either comes in too low for the financing being sought, she said, it can cause the whole transaction to fall through. To avoid that, she said, it helps to work with an experienced real estate agent who knows the area, mortgage brokers and buyers.

"More than ever, you need that advice right now," she said.

Financing can also be a bigger challenge for homebuyers looking to move up. Because they're looking at a pricier home, they're going to be seeking a bigger mortgage, unless they have enough equity in their current home to significantly reduce the sum being borrowed.

Great deals for those with solid finances

For those who do have their finances in order, however, there are some great bargains out there, according to Mike Orr, founder of The Cromford Report, an online publication covering the real estate market in the greater Phoenix, Ariz. region, which has seen some of the nation's steepest declines in housing prices.

"If you're a luxury homebuyer, you've got lots of choices," Orr said, adding that there are some "eye-watering deals" available right now.

He said the Phoenix region has a surplus of high-end homes right now, noting the region was heavily overbuilt with luxury homes a few years ago, with relatively few buyers. He noted one recent case where a home that sold for $1.8 million two years ago was recently sold for $700,000 in a short sale, though noting that was an unusual case.

On such high-end sales, he said, lenders are demanding hefty deposits of 25 percent or more, plus evidence of significant reserves in the form of savings, stock holdings or other assets.

"They're trying to make sure they don't have to foreclose in any event," he said.

Published on July 22, 2009