Wondering which step to take in your buying and selling process? There's a lot to consider, so we've weighed out the options for you:
Buy the Home You Want Before Selling?
Benefits: This approach permits you to wait until the right home becomes available. You will have plenty of time to shop without the pressure of an impending move date.
Risks: Significant financial risk with this approach. You could end up owning two homes for a long period of time. Your loan fees may be higher, especially if a bridge loan is necessary. Your purchasing power may be limited, restricting your home choices.
Your Best Choice When: it is a seller’s market – you can make the purchase with some confidence that your home will sell quickly. Also, a good option if you have a very specific type of home or location in mind, and the supply of such homes is limited.
Reduce Risks: Consult the experts. Ask us about the real market value of your current home. Meet with a good lender to get pre-approved for a loan that doesn’t require you to sell first. Learn about all the costs involved, including monthly carrying costs. Use conservative estimates in your calculations. We’ll then help you determine if you can find what you want for a price you can afford. Prepare your home to sell. You might be able to avoid temporary financing altogether if you get an early offer. Don’t fight the market; if you don’t receive an offer on your home quickly, lower the asking price.
Sell Your Current Home Before Buying Another?
Benefits: This approach is safest. You will know exactly how much money you will have to invest in a new home, and you won’t need to carry two mortgages. You will also pay fewer loan fees, and you will be a stronger buyer.
Risks: Not finding the home you want before you must move out of your old home. Your moving costs may be higher if you need to move into temporary housing and/or require storage. You may find yourself “settling” for a home just to avoid moving twice.
Your Best Choice When: it is a buyer’s market – finding a new home will likely be easier than selling your old home. It’s also a good option if you don’t have much equity in your current home or if moving into temporary housing is acceptable to you.
Reduce Risks: Consult the experts. A good lender will give you several financing options. We’ll show you the current and expected availability of homes meeting your requirements that are available in your price range. You may be able to rent your current home from its buyer for a short period of time. Have a backup plan.
What About Making a Purchase Offer Contingent Upon the Sale of My Home?
How it Works: Your offer is contingent upon the sale of your home. The sellers are allowed to continue to keep their home on the market. In the event that the sellers receive an offer without such a contingency, the sellers would likely have to notify you, then you would have a day or two to decide if you would like to remove the contingency or if you will let the second buyers purchase the home.
Benefits: You reduce the risk of owning two houses.
Risks: You will likely pay more because you are asking the seller to bear the risk of your home not selling. In other words, a seller might accept a lower offer for not having to bear that risk.
Your Best Choice When: you have found the house you want and you can’t buy it without selling your old house.