When you want a new home, what should you do first? Buy or sell? It is quite a question. If you sell first, you might not find a new home in time and be forced to move into a rental property and deal with leases and such. If you buy first, you could be stuck with two mortgage payments. There are many risks involved on both sides of the coin. But it is one that only you can flip. There is less pressure on homeowners who sell first. All they have to worry about is finding a home. Many homeowners have no option, they need the money from the sale of the original home to pre-qualify for a new home loan. Or they could be facing a job relocation and have to sell before they leave the area. You have to determine how much risk you are willing to accept. If you are able to risk paying two mortgages at once, then wait to sell. But if you can't accept that, or if you need the money to buy the new home, you will have to sell first. Yes, you can include a contingency on your offer to purchase, but most sellers don't like to accept these offers due to the uncertainty associated with them. If you really want the home, you may have to pay a premium. Plus, you may have to accept an offer on your first home that is less than ideal, just to get it sold quickly. The stress level is lower when you sell first, but it is still there. There is the pressure to find a rental with a flexible lease that will allow you a thirty day notice to leave. You will feel pressure to find the perfect home, as you feel a little homeless. You will have to move twice and face a feeling of displacement. But it can be worth it. If you sell first, you have time to be pre-approved for a mortgage and really shop around in the price range you are looking at. Sometimes timing works out for buyers and sellers. If you have narrrowed down your list of potential homes when your current home is put under contract, you can go ahead and prepare to make an offer on one. Many times, closings can occur on the same day. You close on the sell of your house in the morning and then on the purchase of your new home in the afternoon. This doesn't always work, but it is smooth when it does. There are some issues that may occur. You could be forced out of your home before you find a new place. For example, on my family's last home sale and purchase, we were forced out by an early closing and aggressive buyer. He wouldn't even let us wait a day or two for water to be turned on in the rental we were going to. Yes, the property was his at closing, but he pushed the closing up by a month and stuck us with it. We could have walked away, but the effort to try to sell the house to another buyer wasn't worth it to us. This will make you angry and very frustrated. Having to move twice isn't much fun. The best thing is to store all of your stuff and only take the essentials with you to your rental. That way, you aren't packing and unpacking and repacking in a short time period. What if you don't find a new house you like? You have to consider that you will have to live in temporary quarters until you find a home. How long are you willing to do that. In some areas, it can take quite a while to buy a home. I know people that look for years. It is all up to you. Whichever way you decide, buy first or sell first, it will work out in the long run. You have to decide how much risk and what you are willing to live with. |
