Buying a new house before selling the old----tips or warnings?

[Ottakee]

I am looking to move in the next 6 months or so, possibly as soon as 6 weeks.

Right now in my target area there are 2 homes that fit my needs and budget and appeal to me.  My current home won't be ready to list for 4 weeks or more.  Also, while it is a great bones property with a house with 5-6 bedrooms, 3 living areas, bonus room, 3 1/2 baths, 2 stall garage (with extra stall for storage that is heated) and a 32x48x14 heated pole barn and a 30x40 horse barn with 4 box stalls, lean to and large well built loft......all on just over 5 acres in one of the best school districts in the county but the township with the lowest tax rate.  The structure of the house is very solid (27 years old) with new roof, new furnace, new AC, etc.  

The issue is that it needs new floor coverings in several rooms and the paint in many rooms needs freshening up.  Plus we have a LOT of stuff......way too much that I hope to pare down greatly.  The realtor mentioned buying one of the homes I am interested in and then totally cleaning/repairing this home and possibly paint and floor coverings (or price accordingly).  The idea of moving out to the new place, taking only what we need and THEN cleaning without 3 special needs young adults in the home (for whom this will be a stressful thing) is very appealing.

I can swing a downpayment on the new house and a few months mortgage payments but is that a good idea or am I better off selling this first and then buying....skipping getting a mortgage.  My current home is paid off and will sell for plenty more than the asking price of the new home as I am downsizing on house size, lot size, features, etc.

Any experience here?

[Catwoman]

Try to look at it from a worst case scenario. Can you afford to maintain both homes for at least a year or more, including mortgage, taxes, heat, electricity, other utilities, general maintenance, and potentially major repairs on either or both houses? If not, I would wait to buy a new house until the current house is sold.

 

Edited August 6, 2018 by Catwoman
Typos are my nemesis.

[DoraBora]

How quickly do homes that size, and with that much land, sell in your area?  Can you look that up on realtor.com or ask your agent about the average number of days on the market?

I'm with Catwoman... plan for a worst case scenario.  In some areas, it can be harder to sell a house once the school year has begun.  That isn't always true, but it's good to be prepared.

(Your current house sounds amazing, btw!  ☺️)

[umsami]

My neighbor is trying to do this right now.  They are double-income no kids....and thought it would be easy peasy to sell their house here.  She told me, it's priced so well!  (Sounded expensive to me--and when I saw how much they paid two years ago and how much they are selling it for...ridiculous.)  Well it's only been a few weeks, and they've already dropped their price.  I think it can be tough to navigate even in a good market.  

[kbutton]

We had two houses this year. The process took longer than we thought it would as some things came up in the new home that were unexpected and required some time to wait, adjust, and decide how to proceed.

It was stressful to have two houses, but with all the stuff we had to do to our house to sell it (floors and paint!), we'd have had to rent a storage space or pod, pack tons of things for an unknown amount of time, and still work around furniture and people. That kind of stress is worse, IMO than just having a lot to do and slightly tight money (we ended up being closer to worst case scenario for cash flow because of the unexpected, but it was do-able). It was much easier to buy a hot plate and some necessities so that we could cook and clean at the new house conveniently while we were getting it move-in ready, and then get into the new house as quickly as it worked out so that we could work on the old one. At one point, we were kind of half-in and half-out at the same time.

Our houses were only 1 mile apart, so time running back and forth is an issue unless you hiring work done.

Oh, even though we had some unanticipated problems with the new house, we did buy it knowing it needed painting and some other fix-ups as well. It wasn't a full remodel, but it needed some love. If you are moving into a house that needs little to no work, it should be easier.

One thing is to know whether your for sale house will require staging. Around here, that's determined largely by price, neighborhood, reason for selling, etc. You need to figure out if you can do the work around items that you leave in the house to stage it and whether you can live without those items in the new house until the old one sells. 

[bolt.]

If I couldn’t carry the situation basically indefinitely, I wouldn’t take the risk. The risk would be bad if the worse-end cases actually happened, but, even if they didn’t happen —the stress would drive me to distraction in the meantime.

[kbutton]

Oh, insuring a vacant house can be a problem sometimes. Obviously it's do-able, but vacancy definitions vary a lot. You should find out before you proceed. It doesn't have to be a deal breaker, and there are creative things like home sitters, staying there x number of days every so often, and things like that. But you should definitely plan around what the insurance company says.

[EMS83]

I guess juggling the costs of moving, repairing, etc. would be my biggest concern.  And apparently being close enough to check on the old one frequently enough.  Here we don't have to worry about freezing temperatures like that.  But I just went through getting my house ready to list in order to buy, in order to sell, blah blah blah and I will never do that again.  I will become religiously minimalist before trying to live in a staged, tour-ready home.  Just... eck.  So we're actually working toward saving up a down payment plus several months' of mortgage on this place.  And money to pay for movers.  Maybe I'll feel differently eventually, but currently, I don't feel like packing us up ever again.

[kbutton]

I kind of forgot how significant this was, but regarding insurance and vacancy, the house we moved INTO was not considered vacant because we were doing some remodeling. It wasn't heavy-duty, but it was house-wide and covered a lot of categories--besides floors and paint, we did a little electrical, a little plumbing, a new sink, etc. Because of that, nothing was considered "vacant" until we'd moved OUT of the old house, and it had been x number of days. 

[alisoncooks]

I think it sounds like a less stressful way to move, for sure!

[Hilltopmom]

We did it last year because I just couldn’t handle the idea of having 4 kids at home & trying to show the house. But we borrowed money from my parents to do it & they were willing to bankroll us until the old house sold. We really wanted to get into their neighborhood & houses go quick there. It worked out & now we are 7 doors down from them & across the street from my brothers family.  And our old house wound up selling the first week on the market, so thankfully it was a short turn around.

[Pawz4me]

We've done it twice. The first time, which was in 2000, we got a bridge loan or something similar to that. I don't remember now what it was called. The second time was when we bought this house a couple of years ago. We were able to pull enough out of our investments and savings to equal the equity we knew we'd get from our current home, and we paid that down on this one. Then when our house sold we paid ourselves back. In both cases we were comfortable with carrying two homes for a year. We wouldn't have done it had we not been. Both times worked out well for us. Each time the houses sold in less than two weeks after we put them on the market, and the closings went off w/o any major hitches.

[Carol in Cal.]

I personally couldn't stand the stress.  YMMV, but I would much rather move stuff into a storage unit and then fix up and sell the current place and then get the new one.  Unless the new 'dream house' has popped up and won't be available later, in which case I might put up with the stress and risk.  But not happily.

[City Mouse]

I've done it twice. If you can swing it, it is nice, but it can be hard to stay focused of fixing up the old house when you are trying to unpack and arrange the new house.

i will admit that it was much easier when the move was across town that across the country.  

 

[Ottakee]

Lots of things to think about.  This move would be a out 10 miles away but same city, schools, social network, etc.....when you are more rural, 10 miles is really close

 

[Bootsie]

Check with your broker.  We thought we were going to be in this situation this past year (but decided not to buy the house we were looking at for other reasons); our broker had some suggestions of how to handle this transaction of financing the new house just until we could get the first house sold.  

[Kalmia]

Here's our worst case scenario. Four years to sell our old house. Seriously. In part because we had to have renters some of the time or we couldn't afford double mortgage and taxes. Both renters (despite good references) were horrible and the first one cost us $10,000 in damages and the second $8,000 in back rent. The rest of the problem was because we bought our house during the real estate bubble and nine years afterward our town/county still hadn't recovered from the loss. Houses lost $150,000+ in value and were underwater, meaning there were many cheap foreclosures on the market that sold before ours. Also 10 years apparently makes a house "dated" and unacceptable to buyers. We painted and spruced up what we could, but we knew we were losing money on this house big time so we didn't completely replace totally functioning bathrooms etc. . Finally, four years after the first for sale sign went up a single dad who didn't care that the faucets were bronze instead of brushed nickel and the appliances were black instead of stainless steel bought it for much less than we were asking (which was break even), we lost all our principal and had to pay the difference as well at closing.

Soooo. No, I would never buy a house without selling the first again, and I will never be a landlord again. The stress of those four years was horrible. 

Now if you have a totally updated house in perfect condition, newly painted and priced low in a market that is not underwater and things are selling like hotcakes you will probably do better than we did!

[Annie G]

Tip: Be realistic about how long it will take to purge your stuff, do repairs to your house and get it ready to sell. If you are at the same time buying another house and moving into that, it might help you or it might hinder you.  It would be too overwhelming for me to juggle both of those, but for someone else it would help to have the new place already chosen. Figure out which kind of person you are. (Hint: it’s hard to work on the ‘old’ house when you’re excited about the new place)   

You could make an offer with a contingency that you sell your house. If accepted, the seller continues to try to sell their house and if they get another offer you have a couple of days to decide whether to eliminate the contingency or lose the house. It might buy you some time if the seller is willing to accept an offer with a contingency. 

Is a bridge loan difficult /stressful to obtain? 

[Ottakee]

I am working on purging and dejunking now but it is a process.  

I think a loan would be easy to get as I have perfect credit, 20% cash down, and a house worth way more than one I am purchasing.  That said, I don't know if I want to do that.

 

[madteaparty]

We did this but were prepared to carry the old house for a while. Easier to show, for sure, but you also have to have an agent you trust when they give you a report on showings, on the state they left your house (esp is showing in winter what with mud over my wood floors, etc).

[G5052]

Make sure (of course) that you would actually qualify for a loan. The criteria are higher than ever, and there may be issues with your employment history. The ones here all wanted a year of full-time employment with a good salary regardless of credit score and down payment.

As I've said before here, we moved out to a rental before getting the house ready. It was at a time of year when we had more choices, and that way I was able to wholesale move out what we wanted and get settled. My garage is still about 1/2 full of boxes. I'm still de-junking and selling things. DH got his things, and the house went on the market empty. Of course renting has it's issues, but it allows you to regroup and take your time finding a place to buy. 

[G5052]

17 hours ago, kbutton said:

Oh, insuring a vacant house can be a problem sometimes. Obviously it's do-able, but vacancy definitions vary a lot. You should find out before you proceed. It doesn't have to be a deal breaker, and there are creative things like home sitters, staying there x number of days every so often, and things like that. But you should definitely plan around what the insurance company says.

 

I had to add a "vacant home" endorsement to the policy, but there was some discount because I was still in the area and checking it daily. Thankfully it sold quickly.

[prairiewindmomma]

pm-ing you...

[Mbelle]

We did this and it truly was a worst case scenario.  The economy fell apart in 2008.  It was a very bad time. I would never ever do this again.