Should you buy (or even start looking) before you sell?
Answer: This is not usually a good idea. The reason is - well money.
Buying your new home. If you find your dream home and you have not sold your current home you might want to make an offer with a contingency. The seller is going to look at your offer and realize he is taking a risk. You may not sell your home in time. You are asking him to basically take his home off the market and sit around and wait for you to sell yours. IF he is willing to take that risk, it should come with some reward. Money. Say 10K more than if he did not have to take that risk. And oh by the way - if he got a cash offer tomorrow with a quick close what do you think he would do?
Selling your current home. After you have found your dream home and negotiated the offer on it, you must really focus on selling your home. You get a low offer but at least it is an offer. So you take it. BUT it is not as much as you wanted, so you leave some money on the table. Say 10K.
YOU LOSE: $10,000 on what you could have sold your house for
$10,000 on what you could have bought your new home for
TOTAL: $20,000
So that is why I almost always encourage my clients to sell first and buy second.
However, there are a few exceptions to this rule. For some people who have small children, a handicapped family member, or elderly person in the house - buying first might make sense. It also might make sense for some folks who have already paid off their first house or those who can afford two house payments. This is especially true for buyers who want a certain kind of house in a very specific area or neighborhood.
A few years ago, some ‘bridge loans' were available. From what I understand, those are now very hard to get. Check with your lender if you think I t might still be an option for you.
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