Written by: PHG agent Allison Fegel
There are three options when moving up: buy a new home before you sell your current one; sell your current home first before you buy your new home; or buy a new home and keep your current home as a rental property. We’ve put together some important things to consider when making a decision, as well as the pros and cons of each strategy.
factors THAT will influence your overall strategy
Your finances
Do you have enough cash on hand to put down on a new home without selling? Even if you do, you need to make sure you are able to qualify for your dream home price tag. Talking to a lender about your specific situation is a good first step. Educate yourself about the power of a Home Equity Line of Credit (HELOC). Using your existing home’s equity as a down payment on a new home can be the magic you need to make your dreams come true.
Market conditions
Interest rates, mortgage availability, competition, demand, consumer confidence, and general perceptions of the economy make up the market. Knowing what kind of market you are in will help set your expectations and make the moving up process easier. Your PHG agent can give you current market statistics for your neighborhood and the area you plan on moving. This will help you figure out what to expect from buyers when you list your home, as well as how quickly you can expect to find a home.
Your motivation
Do you have a deadline to start to a new job, new baby, or school starting? This will have an impact on whether you have time to sell before you buy. In addition, along with condition, location, and market, your motivation is an important variable to consider when pricing your home.
Condition of your home
Are you looking for a project in your new home or is your current home in need of repairs before you list it? (PHG agents can guide you on how to prepare your home for the market.) If you don’t want to live in a construction zone, timing out your sale and purchase should be considered.
How “Buy Before You Sell” works
Prepare your financing which may mean obtaining a Home Equity Line of Credit (HELOC) or using savings
Find your new home: Shop with your Philly Home Girl, execute an agreement of sale and hit all your milestones on your way to settlement day
Close on your new home, make repairs and move in
Make repairs/updates on your existing home and list your former home for sale
Execute an offer, hit all your milestones and close on your former home
Pay off debts and/or recast your new mortgage
How Sell Before You Buy works
Prepare to list your current home: Make repairs, declutter and choose a pricing strategy with guidance from your PHG agent
Window Shop: Start looking at new homes to prepare yourself as a buyer
Sell Current Home: Cheers! Pay off debts and prepare financing for your new home
Temporary Housing: Find a place to crash and put your stuff into storage
Buy New Home: Shop and execute an agreement of sale
Close on your new home and move in
How “Buy and Become a Landlord”
Purchase a new home, make updates, and move in
Prepare former home: Get a home inspection and make recommended repairs
License and insurance: Obtain a rental license (In Philadelphia, a business license is needed) and change insurance policy
Find tenants: Hire PHG to list and lease your property
Maintaining: Keep property leased and stay up to date with repairs
Investment success: Refinance after 50% LTV and make a larger profit (if rates are agreeable)
Whether you are ready to list tomorrow or want to hold off six more months, it’s always good to prepare. If you are buying before you sell, it’s helpful to know the estimated value of your home and how much work you may need to do before putting it on the market. If you need a general contractor, painter, roofer, or other service providers to make some final edits to your home before you list, we can give you some recommendations!
PHG agents are ready to be your in-market leader, expert negotiator, fiduciary advocate, and overall guide through this process. If you’re curious about your home’s value, interested in learning about the home selling process or the current market forecast, we’d love to set up a chat to answer all your questions.
