Home Buying in 92807>Question Details

Sal, Other/Just Looking in California

should i wait to sell my house before i buy another one. I want to buy a much nicer and biger house . I can

Asked by Sal, California Mon Nov 19, 2007

pobabley afford to pay mortagage on the two houses for six months. i live in Orange County, Ca and the house i am looking at is $1.4 million.

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22
With current market conditions you would want to sell first before you buy; however, from your question it sounds like your family has the finances to buy the new home without selling your current home. If so, you do have other options. You could buy now when the market is a buyers market and add your current property to your investment portfolio as a rental so that you could keep the property until which time the market improves. This lets you buy low and sell high... the best of both worlds. Just be sure to communicate with an expert in your area so that you know how easily the home would rent. It is never fun to have two mortgage payments going out every month with no relief. Be sure to talk to your accountant about the tax benefits to each option and higher an agent that has your best interest at heart.
2 votes Thank Flag Link Wed Nov 21, 2007
Hello Sal,

I agree with the comments before my answer. Either wait until you home is sold or better yet, make a contingent offer on your upleg property.

Best regards,
Robert M. van der Goes
1 vote Thank Flag Link Sat Jan 12, 2008
Hi Sal - great question, and I would absolutely sell your house first. You can even ask for a provision in the sale of your home that it can be contingent upon you finding suitable replacement property. However,contingencies such as these limit your buyer pool.

If possible, I would sell, and rent back for a month or so until you are able to purchase your new home.

I wouldn't take the risk of having two mortgages - six months goes pretty quickly!

Hope it helps, and good luck!
0 votes Thank Flag Link Thu Sep 8, 2011
It would be a great time to move up to a larger home. The way home owners look at selling their home is they will sell less than they would like (this is every homeowner by the way). The way you should look at it is that you would be getting a great deal for the home you are going to purchase, as is in your case.

So while you may sell less than you would like, you would be buying at an optimal time, thus getting a great deal.

Hope this helps.

Michael
0 votes Thank Flag Link Wed Sep 7, 2011
Sal,

Base on your post, it sounded like you already located a potential home for your move-up, and you are concerning about opportunity costs for passing the chance to get that dream home vs. the burden of paying two mortgages during the transition. Here couple of options for you to consider.

1. Just go ahead and buy. This is simple for now, but it will be painful after few months of paying both mortgages.

2. Offer to purchase with contigency of selling existing house. This may be a safe option for you, but it could be a big yellow flag to the seller. Those sellers may see this contigency as weakness of the buyer and may not accept your offer.

3. Offer to purchase and convert the existing house to rental. If after 3-4 months and you still could not sell the previous house, you may want to convert it to rental to offer the mortgage payment. Depending on your current mortgage, your month cash flow (or negatively cash flow) would vary.

Hope it helps!

David Pham
National Brokers - connecting people to homes
0 votes Thank Flag Link Tue Jan 25, 2011
So Sal (if you're still out there, which I doubt) - you asked this question over 3 years ago......any luck in buying a home?
0 votes Thank Flag Link Sat Jan 1, 2011
Hi Sal:I agree with my fellow Realtors that say you should sell before you buy in this market. I would say you should start looking as soon as you accept an offer. especially now that the more expensive homes are reaching their real value you might make a real good purchase there are many good buys available in South Orange County (Laguna Niguel) that you might be interested on. I have been working taht area for a while and the Listings are very nice and more important, exepcional value.

RE/MAX
Eduardo"Eddie"Saavedra
(714)588-2925
DRE# 01407443
Web Reference: http://TerraSolRealty.com
0 votes Thank Flag Link Sat Jan 1, 2011
no you may not be able to sell. Don't put yourself in a dangerous position
see below for ino on selling your home.
http://www.homebuyershope.com/sellers_page.shtml
0 votes Thank Flag Link Wed Sep 10, 2008
Should you wait to sell before you buy? - That depends on how long you mean when you say "wait". Do you want to be free of the home in the next year or two, do you need the money out of it to purchase the next home, or can you hang onto it for 7 years, turn it into a rental and sell when the market swings up again? (If you can financially afford to keep it as a rental, you can sell it later as a 1031 exchange and buy a bigger investment property while deferring the taxes owed on the sale. A talk with your CPA can help you decide if that is the right thing for you to do.)

If you don't want to hang onto it for more than a year or two, need the money from the sale to purchase your bigger home, you will probably get the most for it now depending on where it is located.

While you may be able to swing two mortgages for half a year, I wouldn't recommend it unless the average days on market for homes selling in your area is much less than that. Either find your dream home now, make the offer contingent on concurrent closings and price yours agressively to attract a buyer quickly, or work on selling your home and then start looking once you have a buyer.

Wouldn't you rather use that chunk of money on new furniture or upgrades for your new home instead of paying a mortgage on something you aren't living in?
Web Reference: http://www.OCBeachBlog.com
0 votes Thank Flag Link Sat Sep 6, 2008
Hi Sal,

If you want to purchase a Bigger, Better, Nicer home? Do it RIGHT NOW. You are in a down market use it to your advantage. There are sellers out their who will have no problem with contingencies especially if yours is already in Escrow. You will have to make sure you are priced to sell, be the best in the area, in your tract on your street. The other alternative is to rent it, be your own Landlord or ask a Management company to help. This will be less of a headache for you. Management Companies will charge between 6 - 10% of the monthly rent - to be the Landlord for you. Instead of you paying for two mortgages why not have someone else pay it for you. Sal, get out there and buy yourself that Bigger - Better - Nicer and probably cheaper home in this down market. I have had many a client who rented out their property wanting to sell at a later date but ended up keeping it, they were actually getting positive cash flow from their rental.

Sincerely,

Patrick Canavan
0 votes Thank Flag Link Mon Sep 1, 2008
Sal, Robert's answer is certainly the way to go. The other option is to make both sales contingent )your house and the upleg), but put a timeframe on your downleg that won't scare Buyer's away. It appears the million plus market is finally starting to feel the pinch of the lending crunch. This may be a good time to finally get a good deal in the over $1 million price range.
0 votes Thank Flag Link Fri Jul 18, 2008
I agree with you, Cynthia. I don't look at this site as self-promoting, but as providing an answer to one person's question, an answer we all may learn from.
0 votes Thank Flag Link Wed Nov 21, 2007
Sal, I agree with most of the professionals who have weighed in- sell first. There are 2 other angles that I think haven't been brought up. #1: Who know what the market is going to do? What if you bought your new home, and the old one didn't sell, but the market continues to soften? Then you have bought a new home at 1.4, and the value of your old home might be worth less than you planned going in on the $1.4 million. As far a when to "start" buying? I don't agree that you necessarily need to wait until your current home closes escrow to move forward, but I would wait until you know you have a solid escrow in place, and loan contingencies have been removed. In that case though, make certain you have a diligent agent who has checked on your buyer thoroughly- have them qualified by a lender your agent trusts, just in case their loan falls out on their end at the last minute. If your escrow is strong, the buyer strong, and contingencies removed, then I think you can put an offer in on a new property- giving you time to move in, possibly without a double move in between.

Good luck Sal- I hope it all works smoothly for you.

Patti Phillips
800-680-9133
0 votes Thank Flag Link Tue Nov 20, 2007
oh and, you can sell if you price to sell... but if you are sitting on a low tier house (3 bed condo or smaller) you are going to continue taking a bath over the next 6 months to a year minimum. Most people are not pricing to sell right now
0 votes Thank Flag Link Tue Nov 20, 2007
The high end market is falling slowly right now. The lower end markets are falling quickly. I don't know where the high end market is going over the next 2 years, but the mid and low tiers (Especally the low tiers -- 3 bedroom condos and smaller) are dropping FAST.
0 votes Thank Flag Link Tue Nov 20, 2007
You need to have your Realtor look at average time on market in your area. If it's longer than 6 months, you may want to wait. Have you thought about making a contingent offer based on the sale of your first home?
0 votes Thank Flag Link Tue Nov 20, 2007
Hello, OC, from Pasadena,

I would sell before I buy. You can rent in between. I assume you know that when you have a larger home, you not only have a larger mortgage, but larger insurance premiums, tax bills (this can be huge thanks to Prop 13), pool bills, landscape maintainance bills, housecleaning bills, utilities and so on. Right? It's also much harder to find your glasses or cell when you laid them down. lol

Of course, in OC, $1.4M isn't all that large these days. So first, I would do what dames do--window shop. For homes. That way, you'll know a really good deal when you see it. Avoid OC's most common epidemic--Fear and Greed Syndrome. Don't ever fall in love with a house.

If you can "probably afford" two mortgages, you might think of renting your existing home out. If there is a problem with the rental payment, you're covered. But don't rely on a renter to protect you from bankruptcy.

I'm not you, but if I were, I would window shop for a year, meanwhile selling my home.
0 votes Thank Flag Link Tue Nov 20, 2007
I think the majority of Pros would agree on this issue. Wait until your current property is sold before purchasing another property. Not simply and an agreement to purchase from a potential buyer and a sold sign out front but....wait until you home has closed escrow. When you have a potential buyer, ask your agent to inquire whether the buyer would be willing to allow you occupancy of the home for 30-45 days past close. This would give you time to make an offer and close on the new home you desire. It can sometimes be stressful to move out and move again but, you will be very thankful that you did. There are extended stay hotel options in most every market where all you will need is your clothes and a toothbrush....a mini vacation of sorts that you will thank yourself for in the long run. This is a great question as many are contemplating this question! Good luck in your new adventures.
0 votes Thank Flag Link Tue Nov 20, 2007
Hi Sal, I am not familiar with the CA market, however, here in WNY where we have not been hit hard by the Real Estate Market challenges in other areas, we still strongly encourage people to sell before they buy. I agree with Amanda. The market has many more sellers than buyers and time is money. Every month you were to pay 2 mortgage payments, taxes, utilities, etc., is one more month you are taking away from that hard earned nest egg that you have obviously built for you and your family. I realize that you probably love this home. But I challenge you with this. What if you put your home on the market now, get it sold in another 2 months, if this same home is available still in two months, don't you believe you have opportunity to possibly get it at a better price? Patience is a very hard thing when dealing with such an emotional purchase, but it could pay off in the long run. Consider all your options before deciding. Best of Luck to you, Cynthia
0 votes Thank Flag Link Tue Nov 20, 2007
Moving up the property ladder is always exciting but delaying gratification will have it's own rewards. Which problem would you rather have, stressed about money or not stressed about money?

I can't imagine as a seller in a buyers market taking a roulette shoot on 1.4 million and risk loosing both properties. The market it extremely volitale and you will need the to interview several listing agents to get a reality check on your local market, pricing and marketing strategies to get your home to sell quickly.

Be careful getting advice from sales people. Although their motives may be well intentioned they are probably somewhat biased.

Speak to your CPA about the ramifications financially to you IF you don't sell your home in 6 months and will be liable for two mortgages.

Being house poor is not only financially stressful, but hurts the entire family mentally, physically and spiritually. The bigger nicer home will not overcome the burdens of major financial debt.

Best of luck,
Susan Walker
0 votes Thank Flag Link Tue Nov 20, 2007
Hi Sal, I would respectfully disagree with waiting to sell, in most cases. You obviously have a family and need to provide safe surroundings for them. Today's market benefits the buyer in nearly every case. A buyer is most attractive when they have cash in hand and a pre-approved letter from a strong reliable lender. You may wish to be in this category. Having two mortgages and then trying to sell will put you at risk of being too closely attached to the current market challenges confronting sellers. Would you rather have cash in hand and the choice of properties (there are so many)? Or have two mortgages and worried about selling too? In my opinion. speaking from my own personal sale recently, I enjoyed having the freedom of choice. Best of luck to you. This is a great time to be making that move up!


Michael
http://www.MichaelRobertsHomes.com
0 votes Thank Flag Link Tue Nov 20, 2007
I would strongly encourage you to wait to sell your current home until you purchase the next one. In this market, there are many more sellers than there are buyers, which means that although 6 months sounds like a long time, it is reasonable to expect that your home may not be sold within this time frame. That would leave you with the option of having to reduce the asking price of your home to far below what it is worth to sell it when you need to get it sold, as opposed to letting the market take its course.

There will be plenty of homes on the market when you are ready to buy and you should not have a problem locating the next home of your dreams once your current home is in escrow.

I hope this information helps Sal. If I can be of further assistance, please don't hesitate to contact me directly.

Warmest Regards,
~Amanda Wheeland
Real Estate Broker & Lawyer
Web Reference: http://www.cinch2sell.com
0 votes Thank Flag Link Tue Nov 20, 2007
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