To buy or not to buy? That is the question that plagues both new home buyers and experienced ones alike. Suppose you’ve been shopping around- and you’ve found a gem of a place, and the seller has dropped the price below the market price; you would surely be tempted to snap up that deal, worrying about selling your existing home later. Surely it would fetch enough to finance your new acquisition- should you trust your impulse-buy instincts? Or listen to the voice of reason whispering in your ear?
There are no simple solutions to that age-old dilemma, but here are some reasons for and against selling the family abode before securing a new one.
Why you should sell your home first
Much depends on whether it is a buyer’s or seller’s market. In a buyer’s market, selling first unequivocally makes more sense; you do not want to pay interest on two loans simultaneously simply because you cannot sell your home after committing to a new one. Though you can defray some of that by renting the home you’ve bought, it’s a risky endeavour.
In a seller’s market there is a case for buying first, as your existing property should be sold quite quickly to we buy houses in Houston. However you could overvalue your home if you are sentimental and be left with insufficient to pay for the new place.
Indeed in most cases you’d probably want to sell first- it’s the best way to ensure that you’ll be able to afford your prospective property without risking financial hiccups, overestimating the value of the family abode or a sudden turn in the market; regardless, you’d have enough to buy a home… if not the home of your dreams.
Also, once you’ve committed to buying a property you’ll find yourself under tremendous pressure to sell your old one as fast as possible- you do not want to default on your new purchase after all. This means as the deadline looms you’ll likely take whatever offer you can get, gaining less than you would expect from the transaction. This is even worse in a slow market, when more time is necessary to sell your house- while time is not on your side.
Why you should not sell your home first
On the other side of the coin though, selling first means that you will probably have to pay more and have to undergo various financial and non-financial hassels; you’ll likely have to rent if you hadn’t found a suitable place to buy yet- and you’ll likely have to move twice, spending twice the effort compared to having your new home ready and waiting for you. Moving into a hotel and keeping most of your stuff in cold storage is another option, but this too will take a financial and emotional toll on your family.
Also, once you’ve sold your home, you’d best find a replacement soon; housing prices tend to go up over time, barring financial crisis, pushed up by inflation and speculation. As time marches on, so too does the value of homes- leaving you with a wad of cash that is worth less in real terms over time.
So what should YOU do?
Overall, the verdict is clear. While you’ll likely have to undergo greater personal and emotional stresses were you to sell first, this pays off by exposing you to smaller financial risks. Sell first, then buy a home that suits your budget seems to fit most situations.