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Fundamental question on buying / selling your residence
Old 09-05-2015, 08:04 AM   #1
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Fundamental question on buying / selling your residence

I'm interested in others' experiences: did you wait until your primary residence was sold before you bought bought the new place, or vice-versa? We are semi-actively looking to move (purchase), and while our current stategy is to sell first, then buy (we don't want to borrow) our weekend fantasy open house visits occasionally make us go "Wow, this sure could be the place!" For those who have bought first, sold later, how'd that work out?

"The future's uncertain, and the end is always near. Let it roll, baby, roll." - The Doors
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Old 09-05-2015, 08:12 AM   #2
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It depends on the real estate market. And how picky you are.

You can always live in an extended stay motel until you find a home.

How long can you make two mortgage payments? If you cannot make two, or do not have a paid off current home, you have only one choice.

Start the cleaning process sooner, than later. It takes longer than you think.

FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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Old 09-05-2015, 08:29 AM   #3
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Originally Posted by Tree-dweller View Post
I'm interested in others' experiences: did you wait until your primary residence was sold before you bought bought the new place, or vice-versa? We are semi-actively looking to move (purchase), and while our current stategy is to sell first, then buy (we don't want to borrow) our weekend fantasy open house visits occasionally make us go "Wow, this sure could be the place!" For those who have bought first, sold later, how'd that work out?
I bought first, sold later, because when my dream house came on the market on May 1st I wanted to jump on it. This was completely out of the blue and I had more or less given up on finding my dream house at the time. But this was the house. I had a full price cash offer formally submitted less than 24 hours after the "For Sale" sign went up, and before it hit even the realtors' version of the MLS.

It worked out beautifully as far as logistics. I closed on June 26th, moved on July 1st, had my old house professionally cleaned and put it on the market within half a week, and got/accepted an offer on it in less than a week after that. The sale of my old house closed on August 20th.

I loved not having to live in a showcase while packing to move, and it was much easier to prepare the house for sale and have it cleaned after it was empty. Moving is a lot of work, though, no matter how you arrange things. For example I was dealing with offer/counteroffer and so on before I even had my appliances delivered and connected at my dream house, and before unpacking. So, I was a bit frazzled for a few weeks.

My old house was paid off, and I chose not to get a mortgage on the new house, so I had to temporarily liquidate some of my portfolio to do this. I'll probably get a little bit clobbered by taxes on the capital gains, but I got such a great deal on the house that I am not too concerned.

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Old 09-05-2015, 08:29 AM   #4
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I appreciate the input, Senator. Those are among our considerations. What was your experience?
"The future's uncertain, and the end is always near. Let it roll, baby, roll." - The Doors
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Old 09-05-2015, 11:46 AM   #5
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We went house-hunting down in Mexico and bought when we found it. Had our rental accommodation for that year which we had to pay for anyway so rented out our place to a friend for that year only.

OTOH, I carried $500k bridge financing in 1981 after buying our new place and trying to sell the old place for 4 months. Almost bankrupted us. After that experience, I can relate to many of the people that do not have two slugs to rub together.

So I think it is all a matter of the strength of the market at the time.
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Old 09-05-2015, 12:20 PM   #6
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I bought my present home over a year before moving, but rented it in the meantime. The rent more than covered my expenses and once the old house sold I was able to pay off the HELOC. The market I was leaving was thriving, while the one I was entering was going down.

An acquaintance got caught in a market downturn owning two properties. They bought at the peak, and moved. The property market promptly tanked, and it took almost a year to sell their old home at a much lower price than they had hoped for.

As with equities, ideally one should buy low, sell high. Being prepared to rent one property if necessary is one way to reduce market risk. But if you believe that a bird ($) in the hand is worth two in the bush, you may have to move twice.
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Old 09-05-2015, 02:33 PM   #7
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We stumbled upon our dream house 11 years ago and made an immediate offer, which was accepted. We used a 401K bridge loan to make the 20% down payment. After closing, the sellers stayed and rented for 2 months while their new house was being finished. This bought us some time since the rent was almost 2X our new mortgage payment. After they moved out, we spent another 2 months painting and doing other maintenance prior to moving in.

As soon as the offer was accepted on the dream house, we immediately started purging, cleaning, and staging the old place. It went up for sale a few weeks later. It eventually took 7 months to sell, which was 3-4 months beyond what we had planned. We were hoping it would sync up with the time needed for renting to the sellers and painting/maintenance. For those extra months, the double mortgage payment was a pain but workable. At the time, there was no way we were letting this house get away. So we did what we had to do.
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Old 09-05-2015, 03:15 PM   #8
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When we downsized, we bought and then sold, but the new house was not ready yet, so we leased back the old one for several weeks. Also, it was a sellers market so there were no worries over selling.
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Old 09-05-2015, 03:27 PM   #9
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We signed a contract for a new house, which at the time was an empty lot, a year before we moved. Despite having a year's notice the builder still didn't have it ready when promised (lesson learned - never again will we buy a house that isn't built yet). We stayed at FIL's house for 3 weeks, most of our stuff in storage, and then moved.

This was in 2002, the market was good, and our old house sold in three days. There even was a bit of a bidding war on it.
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Old 09-05-2015, 03:35 PM   #10
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After looking for over a year, our perfect on the golf course with privacy condo came available. We bought and spent this summer moving.

Our house went on the market after we moved out and has been on the market for a few weeks now. Our realtor is trying to get us to come down in price but we're willing to be patient.

No debt on either.

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Old 09-05-2015, 04:32 PM   #11
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I wasn't going to own 2 homes at once, much less 600 miles from each other. I rented a smaller place in the new location, moved, and then put the house on the market.

Didn't like the idea of carrying expenses on two homes for an indeterminate amount of time, but trying to get the old house emptied out and salable with two young kids at home proved impractical. Helped a lot there wasn't a mortgage on the house.

The market is good in that neighborhood, and the empty house sold in a few days, so it all worked out. Probably would not have committed to that path 2-3 years ago when nothing was selling.
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Old 09-05-2015, 04:45 PM   #12
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We bought first as we planned moderate-to-extensive remodeling (depending on the house) for wheelchair accessibility. We bought in November, moved in April, did minor updates and staging on the old house and sold it within a week of listing it. We had enough saved (we'd been planning this for several years) to cover the down payment and the remodeling and we were prepared to carry two mortgages for a full year if needed (although it sure was nice that it wasn't!).

Edit: this was in 2009/10 when the market was a little soft, although it's a very desirable neighborhood and well-priced houses sold well throughout the downturn.
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Old 09-05-2015, 06:13 PM   #13
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We also bought first due to the "right house"; location, price, etc., coming on the market and are only a few months into the process. Fortunately, we were able to quickly rent our future house before the 1st mortgage was due, so if things work as planned we will never pay two mortgages. We will sell our current home next summer and relocate. As others have mentioned, a lot depends on the housing markets being considered....where you want to go and where you currently live. We are relocating to a cheaper cost of living area (Colorado Springs) and our primary house is in San Diego... the local housing market is strong and still a seller's market if you price correctly. We were comfortable accepting a little more risk and "buying first; selling later"; we'll know how it all works out next summer.

Good luck in your decision.
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Old 09-05-2015, 06:36 PM   #14
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We are in a bit different situation. We owned two houses and a condo, which we originally thought we would travel between, eventually downsizing one of the houses to a smaller condo.

Then, we realized we didn't want to travel between three places (would mean essentially moving four times a year because one place would be for spring and fall). So, we started looking in the area where we already owned a smaller house. We found one we absolutely fell in love with and bought it.

We now own four places. House in same area as new house is on the market, but hasn't sold and might not for awhile since it is a seasonal market. The house we originally wanted to downsize from will go on the market as soon as we can get back to it and get it ready.

Am I nervous? No. Money easily borrowed on margin against portfolio at 2%. The two houses will eventually sell. Once the two sell, we will actually pocket money versus the price of the new house, and expenses for the two versus the original three will be significantly lower.

Nothing even remotely comparable to the house we bought has come on the market since, nor had it as far back as we could find. We love it, and our kids do as well. Lots of history in the two that will be sold, and lots of stuff to sort through. We are about half way through the smaller of the two houses, and since it is close to the new house, the process is easier. But, very tiring and the big kahuna still awaits.
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Old 09-05-2015, 06:52 PM   #15
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We bought our dream home a few months ago for cash, rented it back to the sellers for a couple of weeks, and moved in right after they moved out. The house was in great shape so we really didn't need to do anything to the house prior to moving in.

Once we moved out of the old house, we had a bit of remodeling/upgrading done. It was infinitely easier to have the work done once we no longer lived there! Since we moved a 2.5 hr drive away (on a good day ), our agent oversaw the remodeling and checked on the house several times a week -- she was great. The house went on the market a few weeks after we moved out, and w/in 10 days we accepted a very good offer. The buyers got their loan, and escrow went without a hitch. The sale closed last week.

I readily admit, we were incredibly fortunate. We had been house hunting for a while so we were ready when The Right House came along, and we were able to pay all cash for it. We had no qualms about buying the new home before selling the old one, because our old home (on which we paid off the mortgage last year) was in the SF Bay area in a hot RE market. We had good reason to believe it would sell quickly and for a very good price, which it did. Still, I was relieved when all was said & done and the sale proceeds were wired to us.
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Old 09-05-2015, 07:20 PM   #16
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We bought a seasonal summer home and enjoy the location so much that we demolished it and rebuilt a year-round home, moved into that and then sold our then main home. We were lucky that the main home was paid off so financing wasn't an issue for us.

As an aside, when we demolished we effectively destroyed the summer home mortgage holder's collateral and I never thought to notify them.

OTOH, my sister had a contract to build her new house and put the old house on the market and it sold right away so they had to move a subset of their stuff into an apartment for 6 months.
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Old 09-05-2015, 10:11 PM   #17
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I've seen a lot of "Wow this is a great place".

So maybe your reluctance to carry 2 mortgages has saved you from a big regret!
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Old 09-05-2015, 10:36 PM   #18
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Bought first. Moved out of first home before listing it for sale which gave me time and space to declutter and purge. Neither house had a mortgage but I had many nightmares about the first house suffering breakdowns of systems (roof, HVAC, appliances) before selling. Thankfully that didn't happen. There are pros and cons either way. Alot depends on market and distance between the two places.
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Old 09-07-2015, 05:28 PM   #19
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We sold then bought our land, and rented for the year it took to build. Just too nervous to do otherwise, but that was a dozen years ago, and we weren't in the place we are financially back then.
If I had it to do over, I would have bought an old RV and lived in it on the build site rather than rent. It would have meant not spending rent money, and we could have kept the plumber's nephew from making off with our tools and tractor late one night.
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Old 09-08-2015, 06:14 AM   #20
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Another "bought first" here, with the transition in progress.

We had paid off the loan on our current house years ago, which made for much more flexibility. We started seriously looking at retirement locations 5 years ago. After making a final decision 3 years ago, we decided then to buy first because our destination had been a hot market that took a big crash, but was starting to come back up again. We also got a 3% loan. We knew the rental market was tight there, and we have completely covered the loan and property management expenses by renting it out.

Next year, shortly before DW retires, we will have our tenants move out, and I will spend a couple of months getting some work done on the house. Then DW will retire, and we will move our stuff, then sell our current house when it's empty.

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