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Buy or Sell: What Comes First When You’re Ready to Move

     
October 3, 2014  |  Real Estate
Buy or Sell: What Comes First When You’re Ready to Move

You have now decided that yes, it’s time for a new home. Time to take that big step, time to make the move.

So which one should come first? Sell your home first before buying a new property, or buy first and sell after?

Despite the great confusion, there really is no one way that is set in stone in going about the buying and selling process. The answer depends on several factors. Hence, in making a decision, there are some considerations to take. Take a look at the following:

Market Trends & Conditions

The Real Estate market could go either way at any time – a buyer’s market or a seller’s market. In considering your initial step, be more specific. What is the market like in your neighborhood or area? What kind of home do you currently own and what is the price range for a property like yours?

Comparative Market Analysis is an effective method used by appraisers to compare your home to other homes that have recently just sold in your area. There are factors in listing a home that a home appraisal can work to your advantage as a seller.

Related Article: Why Sellers Need a Realtor to Price their Home

As a homebuyer on one hand, you need to carefully assess not just the type of home you want, but more importantly, the availability of this type of property. Does the home you are interested in meet your criteria and price range? Do you see the possibility of a long-term residence in that neighborhood? And in a more layman’s term, do you just feel the good vibes and nothing but good vibes? How you feel about a certain home may seem cheesy, but they do matter.

Related Article: Are You Financially Ready to Buy a Home?

PLAN OF ACTION: You will need the knowledge, skills and expertise of a professional Realtor who can guide you and provide you with relevant information and a more extensive listing of properties, including homes for sale that you wouldn’t find on the internet or other property ads (FSBO); as well as pre-listed properties that are yet to hit the market and are not available for the buyers to see.

Lisa Blake, CEO & Founder of The Blake Team Keller Williams and one of the top agents in Colorado specializes in working with Buyers and Sellers. The Blake Team is a full-service real estate company offering the most comprehensive real estate services in the market.  

Financial Options

Selling a property prior could make a huge difference in the reduction of purchasing costs entailed in buying a new home. The equity from the sale could help for the down payment on the new home. Some even depend entirely on the equity to be able to secure their new home. This does not mean however, that selling first is the rule.

An option is to sell your home now and then negotiate to rent it back from your buyer for the time being that you are in the hunt for your new abode. Remember though, that you will need to pay your buyer for the rental just like any other good tenant. It is also important to note that lenders will limit this rent-back term to only 60 days max because anything longer than that would already be considered an investment property. It would be weird to invest in a home that you sold in the first place in order to get a new one, wouldn’t it? So take advantage of this time to aggressively house-shop and delimit your choices to the properties that meet your criteria and future plans. This can be easily done with a reliable and experienced Realtor who knows the ins and outs of the buyer’s market.

Another option is to temporarily live with friends or family. Yet another alternative is to rent short term. Consider paying for a storage facility to keep your things in case you have to be in between houses for a bit longer than you anticipated.

MORTGAGE LOAN: If you can qualify for a mortgage loan on your current home and also the new one, you can actually access the equity with a line of credit from your home now. You will need to take out the line of credit before you list your property and then just pay it back at settlement (Source: Realtor.com).

Discuss possible options with your lender. Some lending companies offer bridge loans specifically for homeowners who are transitioning from selling to buying. If you have a good credit standing and enough equity in your current home, you would make a good candidate for approval on this kind of loan.

Jump Ship or Stay on Board?

Should you go ahead and sell while still hanging on a question mark of whether you will find your next home anytime soon? Again, consider the factors but also weigh in your personal options. There is no right or wrong answer.

A drawback to selling first is that you may be unable to find a home to buy as soon as possible, or you may feel pressed for time into getting a place that does not really meet your “dream home” criteria. Then again, there are alternatives as mentioned above that are available for you to choose from while in that transition, waiting stage. Therefore, all is not lost.

The major advantage however of selling first has to be pointed out – the benefit of equity in helping you financially when purchasing a new property.

Ask yourself what makes you more anxious? Is it selling first and having nowhere to live? Or is it buying first and ending up with two mortgages to pay?

Conclusion

If you have an available place to live, perhaps with a relative while searching or if you have some savings that you can utilize for paying short term rent, then selling first before getting a new home should not be a dilemma.

If you have another source of income that can support mortgage payments for two properties – old and new – then going out there now and buying a new place to live while still keeping your current home should not pose a financial threat.

Got more confused?

Study the market, evaluate your financial situation, consider your short term and long term goals, and seek out professional advice from a Realtor and Lender (they know a lot of supporting facts that could help in your decision-making)

Good luck seller or buyer! Whichever comes first.

 

 

About the author

The Blake Team is a full-service Real Estate team based in Aurora, Colorado specializing in working with Buyers & Sellers, foreclosures/HUD, short sales, and luxury properties. A team with years of experience and an impressive success rate that made it the No.18 real estate brokerage in the nation, as well as the No.1 Keller Williams agent in Colorado led by CEO & Founder Lisa Blake. The Blake Team is your No. 1 choice for getting your dream home!