Are you hesitant to place your home on the market because you have not yet found a new place to live? Not having a plan to set up residence after you sell can be a stressful thought. In this article, we will explore five solutions to this dilemma to see which is right for you and your budget.
Risk Paying Two Mortgages
While shopping for and purchasing a home prior to selling your current residence can be a costly gamble, this method of home buying is often preferred for those who can afford to pay two mortgages plus homeowner's insurance, utilities, and taxes for both properties for a few months. The benefits include knowing where you want to live without the fear of having to move to a rental property and again to a new home should the process take longer than anticipated. Also, being able to use the extra time to move into the new place of residence comfortably at a leisure pace is a huge advantage! One last perk for buying a home while owning another is you can have any renovations and remodeling done on the new place while staying in your current home.
Buying with Back Out Power
For those who cannot afford two mortgages yet have already fallen in love with that next home before the current home has been sold, a contingency offer may be the best solution. A contingency offer means you will purchase the new home at the offered price once your current home sells. If accepted, the owner of the next home will agree to take the home off the market for an agreed-upon timeframe while you try to sell your current home.
This method of securing your new home is ideal when you are the buyer because it means you have the option of backing out when the time period has ended and your current home has not yet sold. For sellers, this offer is a good choice for those who live in a buyers market or homes in need of a lot of repairs. That said, be ready for sellers living in a hot-selling real estate area to turn down the contingency offer. To have a better chance at an offer acceptance, look for slow-moving inventory, sellers who want more flexibility with the closing date, or homes requiring more TLC.
Risk Moving your Belongings Twice
Buyers who cannot afford two mortgages and desire to live in a location where a contingency offer will not likely to be accepted may need to sell their current property first before buying. The upside to this method is you do not have to juggle two mortgages or stress over losing your next home because the contingency time period is about to lapse and your current home has not yet sold. Also, when you find that next home to buy, you are ready to make a legitimate strong offer with real buying power that can equate to better leverage for price and repair negotiations.
On the downside, there may be a month or so where your belongings will be in storage as the closing on the next house may take longer than the closing on the current property. This means you will pay your movers to move your items twice, once into storage and a second time from storage to the new home. Also, you will need to factor in the cost of renting a storage unit from either the moving company or another company as well as a place to live in the interim such as a family member's home, a friend's home, a furnished apartment or a hotel.
These costs can add up quickly, especially when those moving hiccups in your plan occur such as not having rented a large enough storage unit. While hiring a professional moving and storage company can help contain some of these added expenses by offering in-house storage solutions and one company to contact from start to finish, the total moving estimate including the cost of a place to live in the interim should be weighed against the cost of two mortgages before taking on this option. The good news about this lapse in homeownership is you have the freedom to catch up with family and friends or temporarily live someplace fun and exciting while your belongings are in storage.
Buy some Time
Some people are either unsure of where they want to live next or want to wait for the lower house prices of the slow real estate season to buy. For these individuals, renting a home or apartment for a few months to a year or more is already part of the plan to sell high and buy low or spend extra time looking at different locations for that perfect new home. Since many houses and apartments will not be furnished, these home buyers will likely either move all their belongings to their temporary living arrangement or move only their necessary furnishings and personal items to their selected temporary home while storing the remainder of their belongings in the movers' storage system, a rent unit in a warehouse, or a rented moisture-protected crate. The beauty of this renting plan is you have more of a sense of control over the purchase price of your next home while taking your time to find the right neighborhood, school district and local attractions your family will love! Of course, on the downside, you will pay rent, which can be more expensive than two mortgages. Moreover, you will pay at least double the moving expenses, and there is no such thing as building equity while renting.
All of the above options for buying your next home have wonderful advantages for different reasons. Consider the costs and hazards associated beyond the initial moving expense to see which one is better suited to your budget, location and timing needs. Where a preferred method may sound financially out of reach, you may be pleasantly surprised when you examine the bigger picture. Whatever path you take for your next home, we are here to help. Contact us for a free moving and storage quote today.