The American Dream is great. Have a good job. Buy a home. Start a family. White picket fence. A dog and a cat and maybe a fish. Owning a home really helps to make all of the other parts of that dream possible. But, that doesn’t mean that the first home you buy is the last one you will ever need or want to own. What if you have to move for your job? What if your family outgrows the house you bought when you first married? What if your kids go off to college and you want to go with them? No matter the reason, that house you currently own is going to have to be sold and you’re going to have to buy a whole new house in the process.
So, how do you go about doing that? When you bought your first home house, you didn’t have to worry about selling your current one. You just had to make sure your lease was up or your other living arrangements were taken care of. You didn’t have to go through all the extra steps and considerations that come with selling a house at the same time you are buying. Let’s take a look at some of the best ways to handle this tricky situation.
Sell. Rent. Buy.
This is a very financially simple and secure option to consider, however, it can take the longest amount of time to accomplish. Selling your home first and then finding temporary living accommodations while you buy your new home can give you a clearer financial picture of what your budget will be exactly when you are shopping for your next home. You should (hopefully) have enough cash on hand after the sale to have a down payment ready to go without doing something risky like liquidating stocks, getting a loan on your IRA, or a home equity loan. With your last house sold, you should be able to go through the buying process with more simplicity.
Things To Consider With This Option Though:
This can take a lot of time and your out of pocket spending may quickly run out of control. If you are going to sell first and then buy, you will need to secure a place to live in the meantime. With your family’s possessions all packed up, you may have to rent a storage place and find temporary housing, which can be expensive. Without your household items available to you, you may have to eat out more often as your kitchen supplies will be minimal. Eating out for most every meal and living in a motel or temporary housing alternative can tear through savings quickly if you aren’t careful.
So, only consider this option if you have a clear plan and can stay organized during the gap time in which you will be living in a temporary housing solution. Budget carefully for food and living expenses! Selling first is an especially good idea when it is a buyer’s market because that usually means that prices and inventory levels are in your favor.
Buy/Selling With a Contingency
In a seller’s market, this can be more risky, but in a buyer’s market, you might get a good shake. You have the option to put an offer on a new home with the contingency that you are able to sell your current home within a (short) agreed upon timeframe. If you fail to sell, then you cannot move forward with the transaction and you could lose the house to a more attractive buyer. Talk to an expert before moving forward with a contingency offer.
Michael Taylor and his team are experts in the Denver Metro and Boulder County Real Estate Markets. You can contact our team today to learn more about all of your purchasing options: 303-669-2744.