Of course,
the ideal scenario would be to buy and sell simultaneously. But such timing is
never guaranteed. Most homebuyers will need to decide to buy a home then
sell their current home or sell their current home then look for a new
home. If you're contemplating a move, consider the pros and cons of each
strategy.
Buying a
home first can have its advantages, especially if the home is that special find
that may happen only once in a lifetime. But to get the property you want, you
will need to know how much equity you'll need out of your present home, and
have an established sale target date. If your home doesn't sell by the time you
close, you could consider the option of renting it to hold out for the best
offer.
On the
downside, you could end up with two houses. To pursue a buy-first scenario,
many people use their home equity line of credit as a "bridge" or
"swing" loan to provide for the new down payment. However, to qualify,
homeowners generally need a sizeable income. Even if you qualify, the stress of
owing on three mortgages (the old mortgage, the bridge loan and the new home
mortgage) might force you to sell your home at a price lower than you hoped.
Keep in mind that market conditions change. In the end, you don't know how much
you'll get for your present home.
The less
stressful scenario calls for selling your home first. It's easy to understand
why: you know just how much you can spend on a new home; you avoid carrying
three mortgages; and you won't require a home-sale contingency, which may make
negotiations easier. The new owners may agree to a long closing or a rent-back
option so you can take your time, look around, and buy the house that's just
right for you.
It's worth
noting a few disadvantages to selling your home first. You may feel great
pressure to find something fast and even settle for a less-than-ideal home. You
may require interim housing, which could be very stressful if you have to stay
with family or friends for an extended period. Should you decide to rent, it
may be difficult to find suitable housing, especially if you have pets. In
either case, furniture would have to be moved twice and possibly stored long
term. If your house hunting efforts are focused on your old community, selling
first may also involve paying tuition to the former school district so your
child can continue attending school there.
Buy first
or sell first. How can you choose between the options? First, assess your
financial condition. Is it healthy enough to withstand a buy-first scenario?
How well do you handle stress? Do you have the resources to manage three
mortgages and the added responsibility (as a landlord) that comes with renters?
If you sell first, can you adjust to interim accommodations? Would they be
practical for the long term?
Contact Chuck
so that he can perform a no cost Comparable Market Analysis for you. This CMA
will take in to account the recent comparable home sales in your area as well
as comparable homes for sale on the market in your area. A comprehensive CMA is
the best starting point for any Homeowner who is thinking of Selling their
home.
REMAX, Nobody Sells more Real Estate!
Equal Housing Opportunity.