Financing in 94550>Question Details

Karam, Home Buyer in 96150

Should I first sell my home or buy a new one first?

Asked by Karam, 96150 Sat Mar 12, 2011

I'm a move-up buyer, meaning I have to sell my current home which is fully paid to buy a bigger property in a better location.
From my home in Livermore I can probably get between $300k and $350k that I would use to buy a home in Pleasanton for about $700k.

What should I do first, sell my home or just buy the one in Pleasanton and get two loans?
I know about contingencies, but would sellers sell a home if I have a contingency of selling my home?

Thanks for your inputs.

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22
Karam:
In today's market, it usually works best to sell your current home first, then pursue the purchase of a new one. The fewer contingencies you have when making a purchase, the stronger your offer and the better you position yourself to negotiate. It may add some inconvenience to you -- possibly two moves -- and the added cost of renting temporarily. You will need to take these conditions into consideration before you decide what is best for your situation.
I'm available to discuss this with you further, should you want to bounce ideas around to determine what works best in your situation.

Sally Blaze,
REALTOR
925-998-1284
2 votes Thank Flag Link Sat Mar 12, 2011
It's a great question, and one that many buyers/sellers are dealing with right now. I actually blogged about it here on Trulia last week. You can check it out below.

You are in the enviable position of owning your home free and clear. You have more options than most. Check out my blog for the pros and cons of each strategy. There isn't one right answer, but there is one that you will decide works best for you.

I'm right here in Livermore if you would like to discuss your options.

Kevin Collins
925.895.6199
kcollinsre@gmail.com
2 votes Thank Flag Link Sat Mar 12, 2011
This is a preference, a matter of opinion. I personally do not like the idea of holding two mortgages, but each person is different. I can tell you this, you COULD make your next offer contingent on you selling your house but most will not consider it when selling their house, because they basically take their listing off the market while you both wait for your house to sell.
For example, as a listing agent, I present them, but have yet to have a client accept an offer contingent on the buyers selling their current home.

Spirit
1 vote Thank Flag Link Sat Mar 12, 2011
Hello Karam,
It depends on what you can afford. If you can afford 2 mortgage payments then sure buy then sell. There are a number of requirements in order to do that....please talk to your loan agent.
IF the above is not an option then you can sell and have a rent back which will allow you to stay in the home and then move to your next dream home.
I hope this helps and if there is anything else please let me know.
Thanks Again,
Robin Young
Alain Pinel Realtors
877.371.1881
1 vote Thank Flag Link Sat Mar 12, 2011
Hi Karam,

In this market, cash is king and will net you your best deal so I would highly recommend you sell your current home first--it will put you in a stronger position not only with getting a loan but also in negotiating a great deal on the one you decide to buy.

Best Of Luck To You!
Judi
1 vote Thank Flag Link Sat Mar 12, 2011
Hello Karam,

When you are doing the move up purchase, it is most important to put yourself in the best Buying position possbile. You need to be a NON-Contingeny Buyer, (No home Sale to purchase the new Home) to get your best deal. Also I made add, that in Pleasanton, the best homes go fast, usually multiple offers, and Contingent Buyers miss out.
So, if you are in the position to purchase that new Pleasanton home, with out Selling Livermore first, that' would be the smart move.
Buying and Selling homes at the same time is very stressful. You want to be able to focus on each transaction seperatly, so that do not make any major decisions under duress.
I have helped many clients Buy and Sell at the same time, and would be happy to discuss that strategy, if you would like some guidance.

Sincerely
Julia Murtagh
"Bringing Integrity To Your Front Door"
Alain Pinel Realtors-Pleasanton
925-997-2411
Web Reference: http://juliamurtagh.com
1 vote Thank Flag Link Sat Mar 12, 2011
You should work w/ a local Realtor to determine what the market is like in Livermore & Pleasanton. They will be able to guide you in determining whether your offer w/ sale contingency is likely to be accepted. Depends on the market, the seller, etc. If there's a lot of inventory and sellers are desperate to sell, you are more likely to have your contingent offer accepted.

From a cost perspective, taking cash out of your existing home and then also financing your new purchase may lead to unnecessary closing costs. Also, you will need to qualify for the new loan w/ the add'l PITI incurred on your existing. Translation...it will be more difficult for you to qualify for the new loan. Good luck.
1 vote Thank Flag Link Sat Mar 12, 2011
Karam,

SELL SELL SELL FIRST! I don't mean to sound too dramatic, but you'll have no problem finding a home to purchase these days but you may have a hard time selling yours. List your home, find a buyers agent to help you start looking, and don't purchase until you have a buyer for your place.

Marcin
Marcin@conlonrealestate.com
1 vote Thank Flag Link Sat Mar 12, 2011
Hi Karam,
I believe it makes more sense to sell first for a few reasons
1.you will not have to obtain loans for 700k, by putting more down
2. You can do a rent back with the buyer of your current property and stay in it until you move into your new home
3. In this market it will be hard to get an offer accepted with a home selling contingency
4. 350k down makes a very strong purchase offer

If you have any further questions or are still are in need of selling or purchasing assistance please call or email me

Thanks
Taj Weldon
REALTOR, CDPE
650-762-8804
Tajweldon@connectrealty.com
0 votes Thank Flag Link Thu Jul 19, 2012
From a lender perspective:

Can you qualify for the new home with the payments on both the departing residence and the property you plan to purchase?

If you have not previously managed a rental property, the new conventional lender will not utilized potenetial rents to offset your housing obligatoin on the departing residence.

Previously, the rule had been a minimumof 30% was necessary to count the rents. That is no longer the case. There are some portfolio type lenders that will allow for this, but you will not be receiving the competative rates that we see advertised on the internet.

Make certain that you speak with you mortgage professioinal before writing offers, listing homes, etc.

Happy House Hunting!
0 votes Thank Flag Link Wed Jun 27, 2012
Good Morning Karam,
The current market is a sellers market....meaning very low inventory of homes for sale and a lot of buyers wanting to buy. This is great when you are selling and frustrating when you are buying.
To answer your question it really depends how well you deal with stress.

If you have 20%+ of a down payment for the next home then I would say start looking for that next home to purchase. This way you do not have an absolute deadline in which you have to find a home and get moved out because you have already sold your current home and those buyers want to move in. Then once you move to the next home put your current home on the market.

Now there are plus and minus's to the process and you have many options to work with...Which is a great position to be in. Very few people are in your position and congradulations!

I am here to help and if you would like to have a further conversation please feel free to call me at your convenience....cell 510.757.5901

Thanks Again,
Robin Young
0 votes Thank Flag Link Fri May 25, 2012
In order for you to qualify for two loans, you will need to qualify for the new mortgage with both the mortgage payment for the new home and the departing residence.
Even if the departing residence is going to be a 'rental', if you have no experience as a land lord (tax returns for proof), you will not be able to offset the additional mortgage payment with the proposed rents.
If you qualify for both payments, then no big deal.

If there is a way that you can pull together 10% for the new home, you could put 10% down payment and take out a 10% equity line.

Once you sell the Livermore property, you can pay off the new equity line and have a nice 80% first.

There are also 'Asset Pledge' loans that allow you pledge your stock portfolio without having to liquidate it. Again, you could sell the Livermore house and pay down the loan. Your payments will reflect the new balance on this sort of mortgage.
0 votes Thank Flag Link Thu May 24, 2012
In order for you to qualify for two loans, you will need to qualify for the new mortgage with both the mortgage payment for the new home and the departing residence.
Even if the departing residence is going to be a 'rental', if you have no experience as a land lord (tax returns for proof), you will not be able to offset the additional mortgage payment with the proposed rents.
If you qualify for both payments, then no big deal.

If there is a way that you can pull together 10% for the new home, you could put 10% down payment and take out a 10% equity line.

Once you sell the Livermore property, you can pay off the new equity line and have a nice 80% first.

There are also 'Asset Pledge' loans that allow you pledge your stock portfolio without having to liquidate it. Again, you could sell the Livermore house and pay down the loan. Your payments will reflect the new balance on this sort of mortgage.
0 votes Thank Flag Link Thu May 24, 2012
Hi Karam,

It is always a good idea to sell first and then buy. You can always do a rent back for 30 days from the new buyer. Once they remove their contingencies, hopefully within 15 days, start looking and you will have about 45 days to close the other house.

In Pleasanton, because of a high demand for homes, it is not easy to get a contingent offer through. I had a buyer who would have been an all cash buyer after he sold his property and he could still not get a contingent offer through. He sold his house, rented back for 30 days and then closed on the house he was buying in 15 days.

By the way, where is your house in Livermore? I may have a buyer for you. Please give me some details of your home so I can talk to my buyer and see if he is interested. I can also help you find the right home in Pleasanton since I am a resident of Pleasanton. You can reach me at 925-425-9491.

Meena Gujral
http://www.helpusellachievers.com
925-425-9491
0 votes Thank Flag Link Thu Apr 7, 2011
Depends entirely on your income and current cash position. If you're liquid and have enough money for a comfortable DP and monthly payment and could wait it out to sell your Livermore home or rent/lease it go for it. Otherwise wait and sell your home.
0 votes Thank Flag Link Mon Mar 14, 2011
Karam,

The fact that your current home is paid for provides you with a degree of flexibility but under normal circumstances most advisors would indicate that it would be best to sell before purchasing.

A contingency is not received by most sellers with open arms because this essentially means they are removing it from the market, placing all their eggs in one basket, and hoping you will honor your commitment. For many it's too big a gamble.

Our best recommendation is regardless of whether or not you elect to sell before purchasing anew, you should remain active in your search, exploring options and looking for the perfect opportunity. The opportunity itself may also include a plan that clears the way by putting things in perspective as well.

Good luck,

Bill
0 votes Thank Flag Link Sun Mar 13, 2011
Karam you don't need two loans. You can Cross Collateralize by using your vacated property's equity for a leveraged purchase. This is a portfolio bank's product with competitive rates. This product is available on only jumbo loans over $417,000. We'll also give you a TBD approval within 72-hours. This is rock solid. The only remaining item to be approved is the property to be determined.

Happy funding, Rudi
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Sat Mar 12, 2011
Karam,

Good Evening.

It's truly a matter of putting together the best game plan for you. If you can make more or a nice profit
from keeping, perhaps renting your current home, buying a new home and then when the market
recovers, sell, or just keep it rented, go that route. If you don't want the issues tied into renting, and
you can "live with" the sale price of your current home, sell it and move on. It's really risk versus reward.

I hope that helps.

Shawn, REALTOR
0 votes Thank Flag Link Sat Mar 12, 2011
sell first, then buy. good luck :)
Simply because you dont' want to be burdened by two loans if the first house does not sell.

Kamal Randhawa
"Straight answers all the time"
0 votes Thank Flag Link Sat Mar 12, 2011
Hi Karam

Writing a contingent offer in this market will be tough.
If you qualify for being able to carry two loans without
Writing a contingent offer, will then be the best way to go.

Otherwise, sell first and ask for rent back of an additional 30 days.

Good luck and let me know if I can help.
Perry Mistry
408-656-5343

Coldwell Banker

http://www.ruthandperry.com
0 votes Thank Flag Link Sat Mar 12, 2011
Hi Karam...

I would suggest looking at the financing aspect along with the RE aspect the knowledgeable agents below answered. Much rides on your equity position in your current home if you were looking to qualify for a new loan on the Pleasanton home. We can discuss further if you need some guidance.

Best of luck,
Brian
Web Reference: http://www.loansquawk.com
0 votes Thank Flag Link Sat Mar 12, 2011
What feels to me to be the safest is to sell first, which may take more than 6 months to happen, then rent and buy, which would probably take 4 months to COE.

Thanks for your answers, it was really helpful.

Just need now to jump and prepare my home for sale.
0 votes Thank Flag Link Sat Mar 12, 2011
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