The Age Old Dilema for Move-Up Homeowners
In the Los Altos, Los Altos Hills and Palo Alto real estate markets many buyers, perhaps most, have a property to sell before they can buy. In the last ten years in was very easy to buy first and sell second – no longer. There are few options today with stricter lending guidelines. However, many people begin looking at homes to buy prior to deciding how they will handle the issue of selling their current home.
Here are a few of the pro’s and con’s of the two basic methods:
1. Buying “Contingent” Upon the Successful Sale of Your Current Home
Pros: You only have to move once. You can wait for the “right” home.
Cons: Sellers will require a higher price. You may lose the home of your dreams if your current home doesn’t sell. You can’t buy the best homes (they usually have other bidders who don’t have a home to sell). You’ll be pressured to sell quickly to keep your target home under contract.
2. Sell First – Then Buy
Pros: You know your home’s final selling price and therefore your budget for the new home. There’s no economic pressure to sell for a lower price. You can rent in your new destination location and become more familiar with it before buying. You can wait for the “right” home.
Cons: If the market improves in the interim, you’ll pay more for the next home. You might miss the “home of your dreams”, if it came onto the market before you had sold your current home. Interest rates could rise and price you out of your target price range.
Both methods carry risks. By being aware of the pros and cons of each, you can choose the risks that you’re most comfortable in taking. And, in spite of the inherent stress and difficulty of buying and selling a home, this is a terrific time in the cycle to to trade up. The following story that was featured on MSNBC, captures it well (just move the price point up a bit for our area).
Jeff and Steve