Buying a new home can be exciting, but if you are already a homeowner, you might be wondering if you should buy first and then sell your existing home, or sell your current home and then buy the home that you like.
Surprising Reasons to Sell First and Then Buy
There are different schools of thought on the subject, and there are some great arguments for both scenarios. Buying and then selling definitely appeals to the realtor. After all, realtors make their money by selling homes. But most real estate professionals will agree that there are some very compelling reasons that selling first and then buying is best.
If you sell first, then time is, literally, on your side. You do not have to go for the first offer that you get, since you already have a place to live. Further, you can make the sale of the home contingent upon closing with a new home purchase. What this means to interested an interested buyer is that you can stay or you can go, but you don’t have to sell your home at a discount because you have bought another. After all, buying before selling means making two mortgage payments, and who can really afford that?
At very least, if you sell before buying, you should ask for a contingent period that gives you the right to effectively cancel out the contract if you choose to do so, within a period of time that ranges from ten days to a month, so that you can close on the home that you are looking to purchase.
Other sellers make an arrangement to rent their home back from the buyer for a particular number of months following the sale so that they can find the best home for them. This is often a good option. The rent amount is typically the buyer’s mortgage payment each month.
So as you see, selling before buying means that you will probably get more for your home! Buyers can see that you are not desperate to sell, and you will stand a better chance of getting your asking price or close to it.
There are some disadvantages to selling right now. Inventory is high. That means that your home faces a lot of competition, including many foreclosures and the possibility of short sales. Still, if you are looking to move up but want to err on the side of caution, then it is best that you sell first so that you don’t get caught in a bad financial trap of making two mortgage payments, paying the home insurance on two homes, and paying property taxes for two different properties. That can really eat into any cash that you might have stashed away.
And since analysts predict that housing prices may decline even further this year, selling your home in the first half of the year still gives you the opportunity to take advantage of lower home prices when the shoe is on the other foot and you are the buyer instead of the seller!
This guest blog was provided by Allison Klein who helps home buyers purchase real estate Fort Collins and other areas in the Northern, Colorado area including real estate Loveland and real estate Windsor.
