As the U.S. economy recovers from the worst downturn in decades, residential real estate is gaining stability.
Consumers, drawn by one of the most attractive buyers' market on record marked by historically low interest rates and lower home prices in many areas, are returning to the market to move up, trade down, improve location and otherwise enhance their share of the American Dream.
When it comes to buying real estate, the optimal situation is to find a new house, just as you receive an offer on your existing house. You'd then be able to close concurrently and move into your new house a few days prior to closing on your previous home. This does happen more often than not, but anyone looking to buy a new home needs to consider all the possible outcomes and prepare for them.
Should you buy or sell first? There are several ways you can view this subject.
Ultimately, it depends on you and your situation. For instance, can you afford to pay two mortgages in the event your previous home doesn't sell by the time you move? Would you consider a bridge loan (a short-term, high-interest loan that lets you borrow against the value of your old home to cover the bills until you secure the new, larger loan)? Are you willing to move twice to find the home of your dreams if you sell first and can't find the dream home fast enough?
This is why the advice of an experienced Realtor is invaluable. Realtors know the current market conditions best. They are trained and experienced in working with home buyers and sellers to determine the optimal time to buy or sell.
It is generally less stressful to sell your home first, because you won't have to worry about owning two homes at one time. The market will dictate how long it will take for your home to sell, as will the property's location and the time of year. As a rule of thumb, it is a good idea to put your home on the market as far in advance as possible when purchasing a new one. But, since interest rates are low and confidence is returning to the market, there's a good chance your home will sell faster if priced properly.
Again, your Realtor's advice is critically important here. In that case, you may want to purchase a new home first.
What would you do if your present house sells before you find a new home, putting pressure on you to find the your next home quickly? You might then decide to make a temporary interim move first. Or you may request to rent back your house for a specified amount of time as you continue to look for your next home. Those might be good options if you have your heart set on a specific location or type of home. It is also something to consider if you are purchasing a property that is under construction.
If you buy a home before selling your present home, you might end up with two mortgages. Under those circumstances, you may be able to apply for a bridge loan to assist you in making two mortgage payments until you sell your first home. Your Realtor can assist you finding a lender.
So should you buy your next property first - or sell your current property first? This is a complicated question regardless of real estate cycle. Your own circumstances and a good Realtor can help you make the most effective decision.