It's a big question that many people face when they're considering buying a new home: Should I sell my old home first, or buy the new one and then sell the old? There are pros and cons to both options, but in the end, it comes down to what's best for you. The experts at Burns & Ellis Realtors compiled some things to consider when making your decision. Regardless of whether you sell, then buy, having a reliable and knowledgeable real estate agent will make any real estate transaction smoother! Contact the experts at Burns & Ellis Realtors today to get started on your buying, selling, or renting journey!
Start By Understanding The Market
If you're considering selling your home and buying another one, it's important to understand how current market conditions could impact your decision. After all, timing is everything when it comes to real estate. In general, you'll want to sell your home when prices are high and buyers are plentiful. Conversely, you'll want to buy a new home when prices are low and there are plenty of properties to choose from. Of course, predicting the future of the real estate market is never an exact science. However, there are certain indicators that can give you a good idea of where the market is headed. For example, if you're seeing more homes for sale than usual, that likely means that prices are about to start falling. On the other hand, if homes are selling quickly and there are multiple offers on properties, that's a good sign that prices will continue to rise. By understanding these basic market trends, you can make a well-informed decision about whether now is the right time to sell your home.
In A Buyer’s Market
A buyer's market exists when there are more homes for sale than there are buyers. This often happens when the economy is struggling and people are hesitant to make such a large purchase. When there is more inventory than demand, it puts pressure on the seller to reduce the price of their home or offer other incentives, like paying for closing costs. In this situation, it's advisable to list your home first and then start looking for a new one.
In A Seller’s Market
A seller's market is a housing market in which sellers hold more negotiating power than buyers. This situation arises when there is an abundant supply of houses and few buyers interested in purchasing them. In addition to low inventory and high demand, seller's markets are often characterized by stiff competition among buyers. As a result, homes in a seller's market typically sell quickly, often above asking price, with few to no contingencies.
The Pros of Selling Before Buying
Avoid Carrying More Than One Mortgage
Trying to coordinate the sale of your old home with the purchase of a new one can be a daunting task. If you're not careful, it can also be a very expensive one. The key is to have a solid plan in place before you start the process. Most experts recommend selling your old home first. This will give you the cash you need for a down payment on your new home and help you avoid the hassle and expense of carrying two mortgages. It's also much less risky than buying first, since you'll be under no pressure to sell your old home quickly.
Avoid Having to Qualify for More Than One Mortgage
Depending on your financial situation, you may need to either have the cash on hand or qualify for a second mortgage in order to buy a home before selling your current one. It's important to understand that lenders won't take into consideration your plans to sell your home when reviewing your second mortgage application - they'll only look at whether or not you can afford two mortgages based on your current income and debts. Your debt-to-income ratio needs to fit the loan requirements of the time of purchase, which means that your monthly debt payments should be less than 36% of your monthly gross income. Regardless of which route you decide to take, it's important to work with a real estate agent who can help guide you through the process and ensure that everything goes smoothly.
It Can Give You An Edge in a Competitive Market
In today's competitive real estate market, people are practically climbing over one another to get their hands on desirable properties. If you still need to sell your home and you can't afford two mortgages, you may need to put in an offer that's contingent on selling your current home. Avoiding such contingencies may help you win a bidding war.
More Time to Find the Perfect Home
If you're considering a move to a new neighborhood, there's a lot to think about. Do you want to be close to good schools? Are you looking for a family-friendly community? Or maybe you're just looking for a change of scenery. Whatever the reason, it may not make sense to buy a home right away. Renting gives you the flexibility to explore different neighborhoods and find the perfect fit for your family.
The Cons of Selling Before Buying
Moving (Twice!) is Expensive
Moving can be expensive and exhausting, especially if you have to pay to store your furniture. The cost of renting a truck, hiring movers, and buying packing supplies can add up quickly—not to mention, the physical labor of packing and unpacking all your belongings. If you're considering a move, it's important to factor in all these potential costs. Otherwise, you may find yourself stressed out and short on cash.
The Market is Unpredictable
When you're buying a home, it's important to be aware of potential price hikes in the market. If prices rise, you could end up paying more for your new home than you budgeted for. This can put a serious strain on your finances, so it's important to be prepared.
Rent Prices Continue to Rise
The rental market is currently stronger than the housing market. This is due in part to the tight inventory of rental properties, which gives landlords the ability to name their own price. As a result, many renters are finding themselves having to pay more than they would like in order to secure a place to live. In addition, the increased demand for rentals has led to a surge in competition, making it even more difficult to find an affordable place to rent.
Above All Else, Have an Experienced Real Estate Agent By Your Side
When it comes to real estate, having an experienced professional on your side can make all the difference. Buying or selling a home is one of the biggest financial transactions most people will ever undertake, and it can be a complex and stressful process. A good real estate agent will have in-depth knowledge of the market and the ability to navigate its often- murky waters. They will be your advocate, working to get you the best possible price whether you’re buying or selling. And, perhaps most importantly, they will be a skilled negotiator, working tirelessly to get you the best deal possible. At Burns & Ellis Realtors, we have a team of experienced agents who are ready to help you with all your real estate needs. Contact us today to learn more.