So you’ve decided to move to a different house. This involves selling your home, and finding and purchasing another one. Which brings up the question: Which do you do first? Sell first, and then buy? Or buy first then sell? Sort of reminds us of that age old question – what came first, the chicken or the egg? Or that old adage –“don’t put the cart before the horse”. Let’s break it down to see what is involved in this common yet slippery situation.
The first step should always be – talk it over with your Realtor first. Every San Ramon Valley city is its own micro-market, and your Realtor can give you data on what kind of market your home is currently in. Are homes moving quickly, or sitting on the market? Is it a buyers or sellers’ market in your neighborhood? Maybe you’ll need the money from the sale of your original home in order to pre-qualify for a loan for your new home This kind of information will help you to formulate your game plan, and which order makes the most sense.
Many would consider selling first before buying to be a smarter, more conservative choice. A common way to go is to ask for a longer escrow — say, 90 days instead of 30 or 60, which will give you some time to find the next house. Another tactic is to have a plan for temporary housing to give yourself time to make an informed choice on your next home. Rental demand and prices have increased in recent years and often require a one-year term, so be sure to know the facts before renting a place. Rent-backs are another avenue—this is when a buyer lets the seller rent back the home for a fixed period after the closing.
If you buy first, be prepared for the risk of being stuck with two mortgage payments until your original home sells. Plus, you will have to come up with the funds for a down payment. Some folks use a home-equity line of credit as a “bridge” or “swing” loan to provide the new down payment. Another common tactic is to make your offer to buy a new home contingent on selling your house. Some folks may even be facing a job relocation and need to buy and sell quickly. Many companies have a relocation department to assist with this transition. This buy first strategy may also work well if you’re in a market where you’ll likely encounter a multiple offer situation. The timing of both sides of the transaction can often work out.
With all these possibilities and scenarios, it makes good sense to consult with your local Realtor first. Call or email us today, and let’s consider the possibilities. We have experienced both sides, and have the tools to help you. Every client has a different story, and when it’s time to buy and sell, there are markets to analyze, and numbers to crunch. We look forward to helping with the debate!