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Buy Now, Sell Later?

In a rising market it makes sense to buy now and sell later.

If you are thinking about buying a brand new home, congratulations! Have you considered selling your house before you make your new home purchase?

Many people in your shoes would not consider doing it any other way. There are great reasons to sell first and sometimes it is the only way a home buyer can qualify but let’s look the alternative. It could make a lot of sense for you.

For starters, there is an opportunity for cost savings. If you secure your new home purchase early rather than at a later date, you can avoid the inevitable builder’s price increases. On the other hand, your existing home can sell for a higher price later and you can put more money in your pocket.

Your new home will likely need to be built before you pay for it and move in if you are located in a rising market. You may have 4-12 months to wait depending on the builder and type of house you are buying. That means you have no added expense while the home is under construction and your existing home will be appreciating.

You will want to talk to an experienced RealtorĀ® you can trust to tell you the truth about the market your existing home is in and also the market the new home is located in. The conditions can be different from neighborhood to neighborhood.

Just a 2% increase in value of your existing home can mean thousands of extra dollars in your pocket and if you can also avoid price increases, the combination of both your cost savings and extra equity can be sizeable.

For some home buyers, the convenience of a single move is the only motivation they need to buy first and sell after moving in to their new home.

The added benefit to buying first and then selling is that you have the luxury of a single move and avoid renting short term. If you haven’t moved in a while, do a little research: the cost of moving is not cheap, and while you may be able to do it yourself and save money, it will take time and effort. Not to mention, you bear the risk of damaging your belongings, or worse, injuring yourself!

In Tucson, the cost of short-term rental homes is high, especially in the cooler months when most of our rental inventory is occupied by our winter visitors. When the International Gem and Mineral Show is in full swing, it can be impossible to find a short-term residence in the Tucson area at all. If you can stay in your home until the new one is ready, you won’t bear the added expense of moving or renting.

What about the risk? It is true that you could have two house payments for a period of time. This is just one reason you need to work with a professional Realtor that you can trust.

In a rising market, as we experienced in our area in 2017, properly priced homes which are in good condition sell in a very short time – often before the home actually goes on the market. Therefore the risk is minimal and the upside is considerable both monetarily and in regards to convenience.

Before you worry about whether buying first is right for you, it is important to find out if it is even an option. There are two things to consider: your financing and the equity you have in your existing home.

If you are considering buying a new home, contact us or your trusted Realtor first. Working together with you, we can help you to clarify your needs and goals and assess your existing home’s value and equity.

Side by side, we can decide if now is the best time to buy and whether buying first and selling later makes sense for you.

Unless you are paying cash, you should meet with your lender afterwards. Your lender will be able to tell you, based on a credit report and review of your finances, whether you can qualify to buy a new home before you sell you old one or if your only option is to sell your old home first and then buy a new one.

It is wise to meet with a trusted Realtor before going new home shopping. Some builders in our area will allow new home buyers to purchase a new home contingent upon selling their old one.

It is rare, however, that a builder will actually start the construction process before the old home is sold or until the home buyer waives their contingency.

Oftentimes, in the excitement of the new home purchase, home buyers can and do miss out on details and fine print like this. If the home buyer is not aware, they could end up having to sell their home sooner than expected and have a double-move into an expensive short term rental.

Louis Parrish is native to Tucson and is a nationally ranked in the top 1000 Realtors in the United States. He is the broker and owner of United Real Estate Southern Arizona. Discuss with him directly about your real-estate plans: call him at (520) 240.8988. 

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