The decision to sell a home is a big one and it becomes all the more daunting when you're selling to buy. Whether upsizing, downsizing, or moving for an opportunity, there's a delicate balance which must be struck so the home your current in sells about the same time you buy another. There are few homeowners who can afford to pay two mortgage simultaneously, and it's a difficult and stressful situation to deal with.
The most popular places where real estate is moving are: Indian Beach/Sapphire Shores, Lido Key, Bayou Oaks, Park East, and Arlington Park. Other active areas are San Remo, Park East, Bird Key, Ringling Park, and Harbor Acres. However, the old cliche the three things which matter most in real estate are location, location, location is true, but you can't relocate your home, so that means all you can do is take advantage of the right timing and price it fairly. Timing has a lot to do with selling a home, as does pricing. Currently the average listing price in Sarasota is $620,479, while the median sales price is $193,000. When it comes to determining an asking price, many homeowners make the mistake of basing their listing price on the listing prices of comparable homes--who have also come-up with their asking price based on other similar homes currently for sale. It's best to look at homes sold within the past three to six months, rather than active listings.
The Chicken or Egg Conundrum
Selling a property means not only having to price the listing right, it also means being strategic in finding a home to purchase. It's all too common for people to get caught in the unenviable position of trying to pay two mortgages. The main reason homeowners purchase another property while still trying to sell their own is for a smooth transition. It's a way to avoid being "homeless", but it's also an expensive proposition.
"If you plan to sell your home and buy another, which should you do first? If you sell first, you'll be under time pressure to find another house quickly -- and may end up settling for less than you wanted, overpaying, or stuffing yourself and all your possessions into a hotel room until you can buy a new place. But, if you buy first, you'll have to scramble to sell your old house -- a particular problem if you need to get top dollar on your old house in order to make the down payment on the new one. And owning two houses at once is no treat either, even if it's for a short time. You'll have to worry about two mortgages -- in the unlikely event that a lender is even willing to offer you a mortgage for a second house before you've sold the first -- as well as twice the maintenance, and the security issues around leaving one house empty." --Nolo.com
One solution is to make temporary arrangements, like moving in with a family member or a friend. Though not popular, it will allow you to avoid having to undergo the stress of funding to mortgage installments. Another scenario is to set a closing date further out than thirty, forty-five, or sixty days to ninety. Of course, the seller will have to agree to the proposal. A home sitter situation is another suggestion and allows you to avoid having two mortgages busting your budget.
Considerations for Buying Before Selling Your Home
Just because you're ready to sell your own property doesn't mean you're ready to purchase another. It's important to strike a balance and take a step back, thinking about the totality of the situation. In other words, making an emotional decision is more likely than not to result in a bad outcome. Here's what you ought to consider before you purchase a home while still trying to sell your current property:
- Money. Banks don't take unnecessary risks and that includes giving a mortgage to someone that already has a mortgage.
- Contingency sales. This is an agreement which the seller must agree to, but it's a clause in the offer which states you're not making the purchase until your home sells.
- Bridge loans. These wrap up the payments of an existing mortgage and a new one, but here again, banks want to ensure you have the means to repay.
- Renting out your home. While this might seem like a great solution, it's more likely than not it will cost you time, money and frustration.
- Getting a phenomenal deal. There are situations, of course, when a deal can't be passed-up. Though rare, it does happen, and it's very difficult to let a property go that could be a really big investment return in equity or sale in the future. In these instances, it's still best to step-back from the situation and allow an unbiased party, like your real estate broker or agent to help you come to the best decision.