Should I buy a new home before I sell my old house?
The roll the dice decision on whether to go for it or hold back on buying another home when you already own one. It’s depends on lots of factors and above all else, can you financially pull it off? If no bank will touch the new mortgage loan until you pay off the one tacked to your present home, there’s your answer.
Buying and selling your house at the same time?
Or if you have the cash, own your present property too, is it wise to wait or push forward to make it yours?
How to size up what to do? This real estate blog post outlines the process to figure out the best course of action when out of the blue a new home comes along that you fall in love with when your are already in a stable housing relationship.
Can you see yourself tangling with two houses at a time when you juggle the numbers?
It all boils down to a math exercise but there is an emotional side to the pure logic whether you are a Vulcan or not. (Checking ears for points. Whew.)
If you can afford to own two homes at a time, should you buy before you sell? Let’s start with a simple question. How’s you have been sleeping nights is part of the answer on the should you do it or not. Tossing and turning means there is an internal struggle that should be addressed point by point.
To begin with, there is a season for everything, plenty of wisdom like the Byrd’s put to song with the Turn Turn Turn. Real estate markets warm up and cool off quickly. To get top dollar in the shortest amount of time and with the least amount of frustration, homes sells quicker when the market is hot.
When there is a shortage of housing and what you own is very popular among real estate buyers and in tight supply that’s is the best time to sell your house and head on out to look for a replacement one.
But the same housing market that helps you home sale get to a real estate closing ASAP is the same one you are going to wade back out into the deep water to reach for another set of house keys.
In a perfect World, you list a home for sale and sell it within twenty minutes. Then look around at what’s for sale and find the perfect replacement second home to buy. You make a call or two, send an email and get ready to sit down for the slide the keys please. The whole process wraps up the same day without delay.
In real life, the timing is not usually so favorable buying selling a house at the same time.
The last thing you need is pressure. People make mistakes when there is no time to consider other options. When a clock is ticking and time is money, you have fewer or no choices. Take it or leave it gun to the head short and sweet is not a fun position to find yourself in because the options are few and slim.
So when you CAN buy a second home before you sell your last one, should you do it?
Where is the home? Is it a neighboring property? There are only so many of those and the chance to buy an adjoining property decision is based on the past experiences with your neighbor.
If they have been absent, you don’t see the need to gobble it up before someone else does. If the police band scanner has lots of chatter with the address to your neighboring home in the conversation between dispatch and the office on duty today or tonight, the motivation to buy changes drastically.
The price of the home next door is part of the mental acrobatics too and if the tag pinned to the property. Is it realistic, would a bank appraiser nod his or her head in approval for loan approval?
If it is so high that no one else is going to buy at that price level, then wait. If possible get a first option to buy so everyone can try to beat up the seller on the price but everything gets dragged back to you for the yea or nay. If someone is going to steal the place, you want it to be you. If you and the neighboring home owner have not been on the greatest of terms or exchanged warm and fuzzy cute Christmas cards annually, you may be the last person on Earth they want to see the property go to today.
Jumping into a new home while you are letting go of an old one. What else needs consideration? Selling the old one is your first priority because usually money from the current house sale is needed to fun the purchase of the next home.
But how long could you handle strain of two homes to heat, insure, maintain without pressure to cut the price of the old one to make it go away?It is a lot like gambling, knowing when to hold them or play them in price reductions and when to make them. The time of year is critical too.
Over winter you worry about a Maine home much more than when the robins are hop hop hopping around the lawn and the house furnace is hibernating, not slurping fuel oil.
The main objective is to sell the old home and hopefully hold off as long as possible parting with the money to buy the new one. If bank financing is needed because the cash out of the old home is not liquid until it sells, that process is a six to eight week exercise. Maybe your new home owner is not in a hurry to sell or needs possession until school gets out, or weather improves, etc.
Everyone in the room can agree that you want to get as much as you can for your old home, to buy the new one just as rock bottom cheap as possible.
Will another home just as nice come along in time? Could you sell your current home and hole up temporarily until something that trips your trigger comes along? I don’t mean couch surfing or sleeping in your car parked in a Walmart parking lot like those vacationing land yachts do.
Could you, would you live with family and friends? Do you have a seasonal property that could work as a home base if the calendar agrees with your housing shuffle? To wait until everything lines up best from all fronts.
If you sell when the real estate market is highest and wait for it, here is comes. Now’s the time to proceed and hop onto the MLS conveyor belt of current listings for sale. Then the housing supply increases and prices erode so you can get your best deal. Or maybe bank financing interest rates drop a couple points. It all just sweetens the experience of purchasing a new home to take the place of your old house. That is the best scenario if the house of your dreams is not out there when you do have a chance to sell.
And you don’t want to lose out on that one particular house that fits your needs best that just is not on the market yet.
Or to buy at the price level you feel most comfortable with which takes exposure time to see if anyone else if competing with you for ownership. This just in. FACT – Not Every Real Estate Home Listing Sells. Over pricing is a horrible curse to put on a perfectly good home that wastes all those marketing dollars to expose it to the ends of the Earth and back. More on that topic on why is this house sale taking so long? Here’s a dozen reasons your home in Maine is not selling.
Buying then selling a home at the same time.
More questions need answers to help guide how to take the best steps and when in the hop skip and a jump from one to another residence. In your particular situation at this period in time, the income to carry another home loan on top of the one you already are struggling with, are you moving into the new home locally or many states away? If you are staying put in the old home until it sells, consider renting or leasing month to month the new one.
Or the other way around if a job relocation means you have to make the move now.
Or if a family member that is sick or aging and needs you there right now means you can not delay in making the move.Then in reverse, consider renting out the old home to someone responsible. To if not pay all the overhead to at least subsidize expenses.
Someone else heating the old home, mowing the grass and not interfering with a house sale is a good thing during the house selling delay.
The best tenant for your house for sale is a former home owner, or someone in the same boat who understands. Maybe your renter can not buy until his old place sells so it is dominoes. But everyone is in the same boat and understands.
The renter of your old home may want only short term possession too.Don’t enter into a long term rental agreement because in Maine you are not going to make money renting out a single family home. It takes two units to break even and three apartment rentals to make any money because of our low housing prices.
Maine home buyers definitely have an advantage because of healthy housing inventory and low price tags hanging off the property listings.
Buying another home before your old one sells, how else can you pull off this switching properties?
Sometimes a 401K loan from your retirement account is the best option selling and buying at the same time.
More on tax implications, other factors to consider using your 401K retirement account to buy a second home. Or re-financing your present home, maybe securing a home equity loan when where you are now selling house prices are much higher. And that’s why you are retiring and buying in a lower house price market like rural real estate small town communities can offer you.
A gift from a family member may save the day if the down payment for the second home is trapped in the equity of the first one.
It is a fact that your kids need help with the inheritance if there is one early in life, not later.
There are tax benefits from distributing some of the inheritance while the giver is alive not pushing up daisies. Plus a good feeling knowing you are helping a loved one when they need it most. Especially if the move closer to elderly parents will help the grandchildren while they are young. It does take entire family, the whole village to raise a child in rural Maine.
In cases where you absolutely must sell a home before you buy any new one, maybe a lease back is possible from the owner of the house you have your red dot cross hair sights on buying.
But get to the bank if a loan on the new home is needed even with the sale of your old one. To see if you do get this much from the sale of your old house, and if you are buying the new home for this much, to make sure no one in the room clears their throat nervously. And starts to stammer or stutter that there is a slight problem when the numbers just don’t add up correctly.
A good real estate professional can help orchestrate the dance steps in the sell the one you got to buy the one you want next for a new home.
Often while a home under contract to buy, I have seen it work well to quickly get the house that needs to be sold on the market. And we have located a cash buyer for the first home so the second purchase can happen with no bank involved. It is a good feeling to let the buyer of a new home selling their old one first know you have good news.
Timing can work out in your favor but be prepared the old home you need to sell could take longer than you expected. Prepare for the worse, hope for the best and do the best you can to make the switch happen as easily as possible with all the factors affecting the real estate house sale.
I have seen very conservative home sellers just refuse to sell unless the right house is out there to buy.
That contingency makes it a if it is meant to be a house will come up to get them to agree to sell situation.
When you carry two places, plan on repairs doubling up. The joys of home ownership get a times two magnification. Both water heaters spring a leak, so does the flashing around the chimney after high winds peel off a couple vital shingles on the roofing.
Are you prepared for whatever comes up? Houses need maintenance no matter who is living in them and renters don’t step up as a rule to fix the above and beyond items. A good qualified renter interview will assure less wear and tear to the place and also that the monthly rent checks will roll in like clock work.
Swapping homes, changing it up. Exchanging the current house for a new home that better meets your needs.
It happens and buying a home is way way easier for those who don’t have to sell one first. Financing a purchase is harder for the home buyer who already has a house that needs to be sold first. Sellers don’t wait for ever and should not tie up their place over the peak selling months hoping another home sells so that owner can buy. That scenario makes it like selling two homes for the whoever owns the next house. The one they have plus hoping the buyer that owns another home to dispose of gets his place to a cash out closing.
If one sale is tied to a long list of domino train cars on the real estate clickity clack track, train wrecks have been known to happen.
Bridge loans when you have a binding contract on your old home to move forward to buy the second home are one of the products banks offer for a very good reason. To make everything come together when the dates and times just don’t match up to everyone’s satisfaction. You don’t always have to sell your house to buy another but many folks do want to wait. They see it as a sign from above when their current home does not move on the market as quick as they would like and start to get buyer’s remorse.
The longer it takes, home owner seller’s remorse can play a factor and put a wrench in the gears of the house to house exchange.
A bridge loan is taken out when you know your existing home will sell but when it does not to buy you time to correct factors that are racking up the days on market. That DOM is like the operating room machine that beeps beeps and requires careful monitoring.
Buying a second retirement home while interest rates and housing prices are low can mean let’s get the housing show on the road.
To take advantage of favorable factors to get the best deal on top of the right place that does not always come along when you are ready for it. Life is a challenge and timing is everything besides the location times three.
Buy first and then sell or sell first and then buy? We hope this blog post helps you figure out the options of buying while you are selling and different scenarios to think on your feet as you are guided through this tricky exercise.
I’m Maine REALTOR Andrew Mooers, ME Broker
207.532.6573 | firstname.lastname@example.org | MOOERS REALTY 69 North Street Houlton Maine 04730 USA