If you are a homeowner who wants to purchase another home you’re most likely asking yourself a question common to folks in your situation: should I sell before I buy?
The answer to that question depends on several factors.
Your personality
Just the thought of having two mortgage payments – even for a short period of time – can cause massive anxiety in some folks. Despite assurances from your lender of a simultaneous close on the two homes, the uncertainty may linger.
Then there is the pressure to accept an unattractive offer on your current home just to ensure the home sells. On the other hand, if you wait to purchase, you’ll have the luxury of being able to negotiate offers as they come in.
If you crave certainty, you should probably wait until the current home sells to take on the purchase process.
There are, however, those who deal with uncertainty better than others. If that describes you, then going through the home purchase process before you sell your current home probably won’t faze you.
Your finances
Regardless of your personality, if you just don’t have the money to support two mortgage payments then you should sell your home before you purchase another or attempt a simultaneous close (we explain that process later on).
The market
A seller’s market is the ideal situation when you’re selling your current home.
In a seller’s market, when there are few homes available and lots of buyers competing for them, sellers are in the driver’s seat. This is great news when you go to sell the current home, but it may be a tougher process on the buying end.
With multiple offers, not many of sellers will accept an offer that is contingent on another home selling. Thankfully, the overheated market is beginning to correct, so this may not be that big of an issue.
On the flip side, in a hot seller’s market, homes in good condition, located in decent areas, sell quickly. If yours is among them, you take on little risk if you purchase a new home before selling your current one.
Ascertain if the current market caters to sellers or buyers before making the decision. We are happy to share what we know so feel free to reach out.
The simultaneous close
Selling one home while purchasing another is a bit of a balancing act. If you try to time the closings to occur during the same time period you run the risk of ending up with two house payments.
If you allow sufficient time between closings, on the other hand, you may find yourself renting a home and, thus, moving twice.
The ideal situation is to plan for a simultaneous closing, where both transactions occur on the same day. However, this process too comes with risks. If anything should go wrong on the first transaction you could end up not being able to close on the second.
Not only will you not have the new home, you may be in default of the purchase contract and lose your earnest money deposit.
It’s important to choose the right buyers for your current home. How much do you know about their finances? How firm is their offer? What do you know about their motivation to purchase? How badly do they want the home?
Since the process is a bit like a string of dominoes, and the buyer of your home is the lead domino, it’s important to choose a buyer you know will consummate the deal. Otherwise, if he falls, he takes everyone else down with him.
The key to success is hiring an experienced, professional real estate agent. Your agent can guide you through the process, steering the transaction to keep it on course.
