How To Buy A New House Before Selling An Old One
If you plan to sell off your current home, there are many things you need to think of. If you plan to buy a new house simultaneously, this can be tricky unless you have a well-researched plan. If you have a good strategy in place, it will certainly pay off.
You should do three things:
A volatile market can make things worse. Selling and buying at the same time can make the process complex. It is very important to understand real estate markets and market trends. Is it a buyers' market or sellers'? In a buyer's market, it is better to sell first. In a seller 's market, buying first may be better, to make sure that your property is sold fast.
Advantages/disadvantages of selling first
Logically, it makes sense to sell first and then buy. Why? There are many reasons. If you sell first and then buy a new house, you will know exactly how much money you have to spend. It will be easier to buy a new house once you have sold yours.
While buying a new house, it is easier to get a new mortgage if you already sold your old home. You will not have two mortgage payments holding you back. Selling first is usually the best way to go.
This is also the least risky course of action. This allows you to budget your expenses. You are less likely to get caught short by over-extending yourself on your new home.
To bridge the gap between the property which is already sold and to buy a new one, you can check into to a hotel with your family and put the furniture in storage. This can be costly, if it takes times to find the perfect new home.
To avoid such situation, seller can ask the buyer to allow them to stay in the same house till they buy a new house.
Rising property prices could be another risk factor which a buyer may face if there is a gap between sale and purchase. Unfortunately, this will mean you get less for your money as time goes by.
Advantages/disadvantages of buying first
If you are financially stable, and can afford to buy a new house without selling off the existing one, there are many advantages.
Many buyers want to buy a new home to get a better place to stay in. If they can afford two mortgages at the same time, this does have its own benefits.
Buying another home purely as an investment to rent out, or to enable you to rent out your first home and move into your second could be an alternative worth looking at.
However, there are several disadvantages associated with buying before you sell off. If you buy first, you will have to be prepared for two mortgages. You have to be committed towards paying off a loan until you sell off your home.
There is much pressure to sell off your home. Financial crunch can come up anytime. So to avoid being trapped, it is advisable to sell off the property as early as possible.
Often to sell off quickly, you may have to accept a lower price. This may leave the seller vulnerable.
Due to unexpected fluctuations in the property market, the seller may need to take hand more time than he had been estimated to sell the first house.
It is often possible to lessen the stress of buying and selling a home at the same time. The best option would be to know the market trend well in advance, know your options, and come up with a full-fledged strategy for making the entire buying-selling process as smooth as possible.