subject: Understanding How To Buy A Home When Also Selling [print this page] Buying a first home is an exciting time but also one that requires a lot of work. However, when you get ready to purchase your second home, things get a little more challenging, in that along with trying to buy a house, you also have a house, your first home that needs to be sold. Obviously, this requires coordination and you may even ask does the original home need to be sold first when trying to buy a second home.
In answer to this question, you need to consider several factors, sell first and buy, or buy first and then sell. Many real estate agents would encourage you to purchase the second home before putting the first home on the market. However, this is a good decision for the agent, but not necessarily for you. Of course, the current housing market would also influence your decision, whether a buyer or seller's market. Usually, the best choice is to put the first home on the market and then begin the process of looking around for homes you might be interested in buying as your second home.
Doing things this way is actually a good strategy, backed by proven facts that include:
Remember that Time is on your Side
One of the first reasons that you should always sell the first home you owned prior to buying your second home is that you have plenty of time. In other words, having the first home means you have a roof over your head, giving you opportunity to consider all offers that come in until the right one is made.
Being Offered a Great Price
The second reason it makes more sense to sell your first home and then buy is that you are under no pressure and in no hurry. With this, you can research the appropriate price for the home, choosing a price that is fair to you but would also be appealing to potential buyers. Now, if the second home has already been purchased, what happens is that you could end up paying two mortgages until the first home sells, which means eventually, you panic and settle for a price much lower than you want or the home is worth.
Benefiting from a Period of Contingency
If potential buyers were being represented by a qualified real estate agent, there would be a contingency period involved, which is good for you and the buyer. In this case, the closing date would be more flexible, providing you flexible time to locate a second home you want to purchase. In fact, during the contingency period, you would even have the option of cancelling the contract if you wanted.
Renting is an Option to Consider
If you are in a situation where you need to get the first home sold before buying, you still have the option to rent a home or apartment temporarily. Again, this removes a tremendous amount of pressure so you can take your time to locate and purchase the other home.
Keep in mind that sometimes, buying the second home before selling the first home is the better solution. Some circumstances that would justify this decision include the following:
Securing a Home with Excellent Terms
If you located the ideal home and the price is perfect, then putting the purchase on hold might mean someone else would come in and snatch the home from under you. If there is an opportunity to secure a home with excellent terms and for the price you want, then you might consider selling your first home after you buy the second home.
During a Seller's Market
If the real estate market were a "seller's market", which means conditions are more in favor for the seller than for the buyer, it would make more sense to buy the second home first. However, during a buyer's market, when terms are more favorable for the buyer instead of the seller like we are in currently, a large inventory of homes exists. Therefore, the home you need to sell could sit for a long time or sell for less than your asking price. Finding the Perfect Home
Every homebuyer wants to find that one, special home that offers everything wanted and more. Obviously, if you were to come across such a home while your first home has not yet been put on the market, the decision would likely have some level of emotion involved pushing you to buy. Although this might be the right decision, because of the financial investment, you should always sit down and weigh the pros and cons so you make a wise decision and not one based solely on emotion.
by: Oliver Darraugh
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