Should you ever buy a second home before selling your first home? That is the $1,000,000 question and here is my two-cents worth of advice!
Whenever faced with the big decision to move-on and buy another house . . . you must consider a few key factors: The state of the market, The Cost and/or impact of carrying two mortgages, The Effects on your loan qualification for carrying two mortgages and The Risk of the current residence not selling for a long time.
It is true, that in a seller’s market that most sellers will not accept a contract which is contingent upon the buyer selling their current home…if they have any one offers. It is also true that in a buyer’s market or a down market that the seller is just as concerned about accepting the same contingency because the of the average time it takes to sell is a lot longer. It is like a “catch 22″. So what do you do in this situation? Find an agent who is a great communicator and negotiator and most of all, who understand the market where both properties are being sold. The first task of a great agent in this case would be to find out the comfort level of the buyers with respect to the four options [1. Sell house first then buy second house "The I might become homeless approach" 2. Write Offer Contingent on selling current home "My offer may not be as desirable but I feel SAFE approach" 3. Put house on the market and write offer without a home sale contingency and hope you can sell in 30 to 60 days "The I might be a nervous wreck but I believe in my home's value and salability approach" 4. Write offer without home sale contingency knowing full well that even if the house doesn't sell, you are totally ok with renting it out for a year or so "The I'm just ready to go and I love the new house approach"]
Regardless of what you hear from “talking heads”, there is no right or wrong way to do this however, there is a safe way and a risky way to buy and sell at the same time. It is like the stock market… the higher the risk, the bigger the pay off is some times! The bottom line is that without the added contingency, you can often offer a much lower price and still get your offer accepted. It is truly harder to negotiate down to a seller’s rock bottom price if you have the added baggage of a significant contingency.
At Bratton Realty, I have successful done this using all four approaches and it turned into a “win-win” scenario because I put my client’s comfort level as the #1 most important factor in how I advise them to move forward. This rest of issues revolve around the lender’s issues … do they qualify, how does it change their rate or down payment or loan type and of course, can they really afford to pay.
The Good News is. . . I just finished signing a ratified contract on my client’s first home which is currently vacant because they already moved into their amazing new home two weeks ago. They used approach number 3 and yes they both still have all their hair and a huge smile on their face! Maybe my advice is worth a bit more than two-cents afterall?
I’m ready to make someone else smile!!!!
