To Sell then Buy or To Buy then Sell?

What to Do?

Since we have had a regular real estate market for the past two years, it is becoming more common to see existing home owners looking to upgrade to a larger or smaller home, depending on their situation.  Recently, I spoke to several home owners who are considering making a move this year.  The one common question from the homeowners is, should I first sell my house or buy a house?  This is a really good question, but the answer can be complicated.

Which to Choose?

If you sell your house before buying your next home, you may find yourself under pressure to find the right property.  You may have to settle for less of a house, or worse, end up paying too much.  Attempting to purchase your next home before your current house is sold can more difficult, since most buyers are not in the situation in which they can qualify for a new loan before paying off the current mortgage.

Don’t Settle, Make a Plan!

Before making the decision to move, it is important to know your bottom line before anything is final.  It is critical to determine how much you will net from selling your current home.  In most cases, this will impact the purchase price of your next home.  At the same time, it is important to know how much it will cost to purchase your next home.  Not the purchase price, but the closing costs associated with title and escrow fees; and how much your lender will want up front for property taxes and fire insurance.  This will all impact how much you can put down on your new home, which will affect the most important item, your new monthly payment. 

Where are you Going?

Part of the process of making the decision to move is to know where your destination will be. It is essential to determine that the house that you want to buy is available.  If you are looking for a house that may not even be on the market, it will impact the decision of selling before buying your next home.