When selling your home in order to buy another home, the question of which to do first comes up immediately. Should I sell my current home first or should I buy my next home then sell? This can be a tough decision to make. If you currently own a home and are considering a move, you need to first examine the reasons you are moving. Are you relocating for a new job? Have you out grown your current home? Are you downsizing empty nesters? Having a clear goal in mind will help make the decision of what to do first easier. For example, if you own your home outright with no mortgage, it’s much easier to buy first as you do not have to pay two mortgages and you will be in a better position to decide which of your belongings fit in the new place and which need to be tossed out.
Pros of Selling First
Not paying mortgages on two house
You know exactly how much you have to spend on your new home.
You’re not tempted to take a lower offer because you are not the under pressure of multiple mortgages and the desire to get into your new home
Pros of Buying First
You don’t have to move twice, once to a temporary rental after your current home sells, then again to your new home.
You will be less likely to rush to choose your new home and possibly miss out on a better deal.
Not stuck in a temporary situation like a rental that could add stress to your daily life.
But right now, in Los Angeles and many other sought after urban areas, it’s a seller’s market, and that almost necessitates selling first. Unless you have a boat load of cash, or access to a bridge loan, you have to sell your home before you buy your new one in order to compete for the property of your dreams. If you make your offer on the new home contingent upon the sale of your current home, you will likely find your offer at the bottom of the pile.
So if you really want to sell your home to buy a new one in the current hot LA property market, keep in mind that although you will benefit as a seller, you will join all the other buyers competing for the low inventory of homes for sale at this time.
One way to work the seller’s market in your favor is to have the buyer agree to make the closing contingent upon finding and closing on your new home. Buyers may be reluctant to agree to an open ended closing but might agree to an extended closing of 60 or 90 days.
Another tactic is to close on the house you are selling but rent back from the buyer until you have found your new home. Again there are buyers who might find this option appealing especially if they have to sell their home as well.
As a final resort, you can always put you stuff in storage, and move to a short term rental. It may be disruptive to your daily routine but it could also be viewed as a vacation, especially if you pick a place with a pool!
As soon as you feel you’re ready to get serious about moving, begin talking to a real estate agent. You need an agent who will work with you on the best course of action, at your pace with your interests in mind (like me!). Have the agent prepare a comparative market analysis for your home to give you a professional estimation of what your home will sell for and what you will net from the sale. Then reach out to a Mortgage lender to discuss your financing options and how much new home you can afford. Have your real estate agent set up searches based on your search criteria & start looking for your dream home. Once you have found something you feel you would make an offer on, you know it’s time to put your house on the market and begin the search in earnest.
Know your motives, your desires and your personality type, hire a good realtor, and jump into the process. It will be stressful, but it can be fun and exciting and in the end you can make your dreams come true.
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