We are just about finished with our five year plan to fix this house up and sell it, and are wondering how one goes about moving from one house to the next. I’ll give you some pertinent details:
our house, while excellently located near multiple schools, shopping, transit, and driving routes, has some unfixable flaws which might make it a tougher sell - a large electrical pole in the backyard making a garage very difficult, and half the basement is only six feet high (it’s a back split).
the house will be priced to take these flaws into account; in other words, realistically priced.
our housing market was superheated until recently, but has cooled off since. It’s still quite healthy; properties are still moving.
we are not looking for a perfect next house, but we do have some non-negotiables - it has to either have a garage or be able to put one up; it has to be on a quieter street; it has to have a flat back yard.
we’re looking for something of a similar size to what we have, and probably in the same neighbourhood or nearby.
we have a mortgage now, and we’ll need a mortgage for the next house, too.
So, what works best? Sell this house for the most we can get for it, and then start looking for the next house, or find the perfect house first and then try to sell this house? Given this house’s flaws, I’m leaning towards selling this one first, and cross our fingers that we find something acceptable before we have to leave this house. I’d hate to find our perfect house, and have this one sit on the market for months and months while our offer to buy runs out.
Buy an new house, move, then rent your house to someone. You keep the money and equity, they pay for the passage of time. A lovely situation, if you ask me.
Suppose you ask a last-year student at some architecture school to design a garage for you that takes into account the electricity pole.
Suppose also that you, being a landscape architect, could have the backyard made into a couple flat terraces.
How much would that set you back?
And how much would your selling/buying taxes be? And how much for moving, redecorating the place, temporarily paying for two houses, and buying new furniture because the old stuff doesn’t fit in the new home?
If you can’t afford to pay two mortgage payments, I’d sell first. The house could end up sitting on the market or only sell for a lower price than you are currently expecting. Better to wait until you know when and for how much you’ll be selling your house before you start looking to buy.
Not unless you ask a lawyer about laws governing rentals in your state. We bought a house from someone waiting for their new house to get built. Since we were renting in town month to month, we were fine with renting it to them until their’s was ready. But it took quite a bit of lawyer effort to make it work, even though we were all friends. There are laws about evicting people if your tenants don’t want to move and you want to sell, you have to show the house with the renters in it, renters who may not be as interested as staging the house as you, and a host of other issues.
The way we’ve done this is to look for houses to see what is out there (lots are on the market for a long time around now) and then show yours in parallel. You can make your purchase contingent on selling your house - you are much more likely to get away with it these days. (Don’t make the sale contract contingent!)
You might not get the very perfect house, but you don’t want to negotiate to buy with the attitude that a house is perfect anyway.
There’s no reason why you can’t be looking for a new home while you’re selling your current one. If you find the ‘perfect house’ in the meantime, you can make a ‘contingent offer’. Meaning your offer to purchase is contingent on selling your current home. Often this includes a ‘first refusal’ provision that gives you an opportunity to match any other offers that the seller gets.
If it works out, great! if not, so what? you keep looking for that other ‘perfect house’.
We chose not to carry two mortgages when we made an offer on our current house–we put in the contingency USCDiver mentions. The sellers countered back to have it removed but we stood firm on that.
We also chose not to look for a house in Boston unless/until our house here in Kansas City sold. Neither of us were comfortable with the financial strain that would put on us. Your tolerance may be different. I’d suggest you make absolutely sure that the total amount of owning two homes–the actual mortgage being just part of it–is something you can reasonably do.
If your housing market is even remotely as bad as it is here (U.S.), sell your current house first before you look for a new one. It may take much longer than you anticipate to sell your current home. If you decide to take the risk, at least buy your new place with a contingency that you sell your old one (but the seller may not want to accept that).
Our housing market is okay, but our particular house is what might be the problem. I am really averse to carrying two mortgages; I don’t think our bank would even give us a second mortgage. So, it sounds like making a conditional offer and doing both at the same time is what most people do. It sounds complicated, but I guess this is a complicated situation (going from house to house).
Oh, we couldn’t put up a garage in the back yard not only because of the pole, but also because of the support wires running across and into our back yard. Forgot to mention those little babies.
IMO any house will sell in any market - it just may not fetch the price the sellers want!
We are fixing our home up to sell next year. We have no mortgage so we could afford to buy a new home while selling, but have chosen not to go that route. Instead, given the uncertain market we intend to market our house, and buy after it sells. If we have to keep our stuff in storage and rent a house/condo month-to-month while looking for a new house, so be it. And we’ll just toss the proceeds from the sale in an income producing account. And if the house does not sell for a while, well, we’ll be living in a nicely fixed up house.
If you move out, and a prospective buyer learns you are paying 2 mortgages, they will try to use that as leverage.
Contingent offers are fine, and in today’s market more buyers are accepting them than in the recent past. The potential problem is if your contingent offer is accepted, the house remains on the market for anyone without a contingency. If such a buyer appears, you have a short time (a day or 2) to decide whether or not to remove the contingency.
We had that happen during our last move. We had our contingent offer accepted, then very shortly thereafter, they said they had another non-contingent offer. We were confident our house would sell and we really wanted that house, so we agreed to remove the contingency. You know the story - as soon as we did, not a single prospective buyer looked at our house for weeks. Very stressful!
Okay, now you’re scaring me, Dinsdale. I think we will be in a much more comfortable position if we sell first and buy second, even if, as you say, we need to move twice and pay rent for a short time.
This is especially true if house prices are trending downwards overall.
I would keep looking at houses while you are selling yours. Actually buying a house can be a pretty quick process if you have already done your homework and you both know exactly what you want and your financing is in order. If you have a good idea what’s on the market whenever you finally get an offer on your house, there is a decent chance you may be able to rent the house you buy.
Moving is always a stressful time - IMO contingencies just have the possibility of making it moreso.
So we pulled the sale contingency, figuring our house was so clean and desireable, it would sell in to time. Like I said, weeks went by with ZERO lookers. Not even a single lowball offer.
As the closing date got nearer, we were panicking on how we could swing 2 mortgages. And with NO lookers, we felt we couldn’t even assume it would just be for a couple of months.
We realized the financing date was coming up. When we wrote the offer, we had just put in some generic numbers, assuming we would sell our existing home and have our considerable equity to put down on the new one. No way on my salary we could qualify for a 90-95% loan at the rates specified in the contract. So we decided to invoke the financing contingency and get out of our purchase contract. Our lender wrote us a letter saying they would not approve us for a loan at the terms specified. Pissed the sellers off to no end, but we felt we needed to do it.
You can predict the rest of the story. THE VERY NEXT DAY, a realtor called and said they wanted to show the house. We said “Sure, whatever.” Didn’t make a move to clean anything, and didn’t leave the house. I remember it was a Saturday morning and my kids were eating breakfast and watching cartoons. By lunch we had received an offer and they accepted our counter.
So all we needed to do was resurrect the purchase of our other home from these people who despised and distrusted us. The words I remember hearing were something like “They are requiring that you get a loan guarantee from God…”
I had my house on the market for a while in 2006, and finally got tired of keeping it perfect and moved in Feb 2007. Took me about 6 months to sell my old house, in the meantime I was sweating, paying two mortgage payments. But if you can afford two mortgages I think it’s a lot easier to not live in a house you’re trying to sell.
Renting the old house is always an option, but I would suggest teaming up with a real estate agent that handles rentals, I know several people that tried renting on their own and their renters were real hell to deal with.
One thing that can be done today is look at houses in the area where you want to buy and figure out how long ones of interest have been on the market, and what percentage are owned by banks. Ten sales of those listed in our local free paper were clearly from banks or mortgage companies, between a third and a quarter of the total.
If houses owned by banks are in acceptable condition, I’d assume you’d be able to get them fairly quickly without a lot of arguing. If that is true, I agree you might want to have a contract to sell in hand before making any offers. You might actually have plenty of time.
I just went through this (I close on the house I’m buying tomorrow)!
I didn’t have an option. I need the proceeds from old house to get me into the current house. I closed last wednesday on the old. We’re renting back until July 1. I close on the new house tomorrow (Wednesday the 25th). We have the movers coming on Sunday. Woo Hoo!
My house was on the market for 2 1/2 weeks. I am a true believer in Catholic Voodoo as my wife calls it. We buried St. Joe, and then did the important part… the prayers. God Bless us one and all!
