I’m thinking about this now, because I am considering whether to make a move from Glenside to Mt. Airy. Even though Glenside is a nice town, and I love the Glenside Farmer’s Market, there is not much else holding me here. Mt. Airy, on the other hand, has the Weaver’s Way Co-op, multiple farmer’s markets, the Wissahickon Park, and a really vibrant community. It’s closer to the city and has a nice collection of venues in its own right. So, I’m really thinking about moving there. The problem is that I am a homeowner already; and unless you have a lot of extra cash, that creates a complicated dilemma.
The first issue is, I don’t have enough cash for a down-payment on my next house until I sell the house I own now. The simple way to solve this problem is to get an equity line of credit, and voila, enough cash. But that points to the second problem. I can’t afford to make two mortgage payments simultaneously. So, I need to sell my current house and buy my next house simultaneously. That is a lot of pressure. It almost is enough to make you stay put, except I don’t want to stay put.
So, in what order should I do this? Find a house I like, put an offer in on it, and then put my house on the market? Well, the seller of the house I want might not have a lot of confidence in my offer, being contingent on the sale of my home in this market. Especially if I haven’t listed it for sale yet. And if the seller is not confident in my offer, they probably will not want to accept it – so I don’t get the house.
I could list my house for sale, find a buyer, and then look for a house to buy myself. But what if I don’t find something in time and end up with nowhere to live?
Either way, I am putting myself into a position where I will probably lose money; either because I am desperate to sell or desperate to buy. So what is a homeowner to do? (Those lucky first-time buyers don’t have to worry about this!)
Well, I think the answer to this question lies in the market.
When it’s a seller’s market, and homes are being sold as soon as they’re listed, the most important thing is to get my next house. In that kind of market, I won’t have to worry much about my house not selling, because just about every house is selling in no time. I just have to worry about getting my offer accepted.
But that is not the market we are in right now. Right now, houses are sitting on the market a little longer. Chances are, with inventory levels as high as they are, I’ll be able to find my next house fairly easily. I might even be the only buyer making an offer on the property. But, I don’t want to be the distressed seller that lets my house go for a song so that I don’t lose the house I want to buy. In this market, the best thing to do is to list first, and then while I’m waiting, start looking for my next home.
I do want to mention an option C, which I have done before. Don’t sell your home but instead keep it and rent it out when you buy your next property (and get the equity line if you need it for the down payment). I only use this option if the rent is going to cover the mortgage, the expenses, and a decent positive cash flow on top of that. But if it does, welcome to real estate investment!
