Should You Buy or Sell First?
So you're ready to take the plunge. You'd like to sell your house and buy a
new one. Or, you'd like to buy a new house and sell the one you have. Which
is it? Making the decision to buy first or sell first can dog a lot of
homeowners. There are several factors to take into consideration, but the
most important one is the current state of the housing market.
Consider supply and demand: The easiest way to look at the dilemma
is to base it on supply and demand. In a hot market when supply is low and
demand is high, buy first. You don't want to sell your house and then find
slim pickings when it's time to buy. However, when the market is cool (such
as right now), demand is low and supply is high. Sell your home first with
the confidence that there is plenty on the market, and you'll find what you
like. Plus, having already sold your house is money in the bank
Examine the risks of buying without selling: While the equation
seems pretty simple, there are several layers to examine. You know that if
you buy first and your home doesn't sell quickly, you could get stuck with
two mortgage payments. No one likes the sound of the term "bridge
loan." What few people think about, however, is that not having a good
down payment affects the kind of financing you get on your new house. You
need a signed purchase and sale agreement on your current house to get a
good loan. Without this in hand, you could get stuck with a lousy interest
rate, which could cost you for decades to come.
Sell first, but protect yourself: If you sell first and then can't
find the house you want, you're stuck. You could put all your belongings in
storage while shacking up with friends or relatives. Can you say
"hassle?" A better bet would be to negotiate a closing date that
is far enough out to give you plenty of time to find a house. I had one
client who signed a purchase and sale agreement on a house in April, but
did not close on the new house until late August.
The bottom line: It is always better to deal with the hassle of not having
a place to live right away than it is to take on the financial risk of not
selling your home. My bottom line today is: Sell first!
Debbie on NECN
I was happy to provide some commentary to NECN on the $250
million fund established by the Commonwealth of Massachusetts to help
selected subprime borrowers.
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July's Home Value Improver
Turn your entry space into a great mudroom!
Clutter is not your friend. Have you ever had to dig through piles of shoes
and folders to find your son's backpack when the school bus is coming
around the corner? If so, it's time to take control of your entryway, or
other space in your home that can be used as a mud room. If you don't have
money or the technical expertise to install a whole system, try these
1. A space to call one's own: Give everyone his or her own space.
Separate each family member's shoes with shoe bins (which fit perfectly
under a bench); decide whose coat hook is whose, and where they will go. It
might be fun to even hang a family member's photo above his or her coat hook.
2. Categorize, categorize, categorize: Put stray items into
categories. For example, keep your everyday and current season coats in
front in an easy- to-reach spot, but keep your less-worn coats in a back
hall closet. Keep ballet bags separate from school backpacks.
3. Find new uses for old furniture: An old chest of drawers or an
armoire near the front door will offer a wealth of storage - and look cool,
too. Imagine in the winter: A drawer for each child, or a drawer for
mittens, one for hats, and one for scarves.
4. The key to all this: Don't forget to set aside a special spot for
your keys. Ideally, you want this to be within reach of your door so that
you can pull them out of the door lock and put them in their designated
5. Consider guest needs: As if it's not bad enough to trip over your
own kids' shoes, three pairs of your daughter's friends' shoes in your
hallway can make a mess, too. Think about a basket by the front door that
guests can toss their shoes into. It doesn't have to be gorgeous or
organized, just convenient and somewhat out of the way.
6. Adapt to changing needs: Consider your mudroom a work in
progress. When you realize that a part of the system is not working, change
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This month we're dealing with a challenge that many homeowners
face - whether to buy or sell first. The answer is different depending on
market conditions, but there is always one thing you should do first -- ask
a trusted mortgage professional for advice.
By talking through your specific situation with a mortgage expert, you will
be able to weigh the pros and cons, understand how the market may impact
your decision and, ultimately make the best decision for yourself.
I'm always happy to answer your questions about mortgages. Consider me your
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"Mortgage Minute" in ForeclosuresMass.com's monthly newsletter.
This month's column: "Are You Ready To Be a Landlord?"