Downsizing: Sell Old House First or Second?

[daylatedollarshort]

I priced out the cost of staying at a two bedroom, pets allowed, furnished corporate type apartment compared to how much our current house costs and showed it to DH. He was concerned that the corporate housing would cost too much money to stay in if we sold first and he didn't want to have to move twice.

If we stay at a furnished 2 bedroom suite type place we can put the furniture from the house in a pod and we only have to pack up once. Plus with the corporate housing we no longer have to pay separate amounts for property taxes, Internet, utilities, etc. and we can invest the money from the current house. So in the end the corporate housing isn't a bad deal at all. Plus we get the gym, pool, maid service, etc.

I also pointed out all the sage advice from this thread like then we will know exactly how much money we have from the old house before we make an offer on the new house, how if prices go down we won't have two houses to lose money on, etc.

So he agreed that selling first was the right thing to do. So thanks for all the great advice. I appreciate that many of you had good reasons for selling second and appreciate you sharing your experiences with me, but for us in our current market with relatively high real estate prices compared to the rest of the country, crazy month to month and year to year price changes, rising interest rates and maybe being in a bubble market I just wasn't comfortable owning two houses at one time.

 

[Meadbh]

I think you have made a good decision!

 

[Cat-tirement]

DW & I bought first, like NW-Reader and Meadbh. We are a few years from ER, but we knew where we wanted to end up. The market there was seriously down, and interest rates were very low, so we bought a house last year. Prices there are up about 10% since then. We are renting out the new house until we ER, which covers the mortgage and expenses. (We knew this would work before buying, due to the serious rental shortage in the area.)

In our current location, the market went down, but not as drastically. Even if the market doesn't pick up much here by ER time, I'm not particularly worried. We bought the current house during a slow stretch 20 years ago, and it's been paid off for a few years now. My main goal is to recover sufficient cash from selling the current house to be able to pay off the new one. Overall, we've had fortunate timing.

One other minor benefit to having the retirement home first - We already know how much space we will have once we get to the point of decluttering and downsizing from our current location.

 

[A Bird In Hand]

We put our house on the market and then bought our second house shortly afterwards (before the first house sold). We expected our house to sell pretty quickly, but that didn't turn out to be the case. It took a year to sell the house, after several significant price reductions. We could afford both payments, but just barely. In the end it worked out fine -- we learned to be very frugal, and we still cleared quite a bit of $$ on the first house. But a year of two mortgage payments and not knowing if/when our house would sell was very stressful and risky.

So though your situation might be slightly different than mine, it's close enough for me to recommend selling before buying based on my experience.

 

[Meadbh]

We put our house on the market and then bought our second house shortly afterwards (before the first house sold). We expected our house to sell pretty quickly, but that didn't turn out to be the case. It took a year to sell the house, after several significant price reductions. We could afford both payments, but just barely. In the end it worked out fine -- we learned to be very frugal, and we still cleared quite a bit of $$ on the first house. But a year of two mortgage payments and not knowing if/when our house would sell was very stressful and risky.

So though your situation might be slightly different than mine, it's close enough for me to recommend selling before buying based on my experience.

I think your forum name is very apt in this situation!

 

[daylatedollarshort]

But a year of two mortgage payments and not knowing if/when our house would sell was very stressful and risky.

Yes, I am risk averse, so for me selling first is the clear winner.

I pointed out to DH we have relatives who have traveled in RVs with more people and less square feet for months at a time and they survived.

We will be living in 4 - 5 rooms for who knows how long but they also have a business center, pool, breakfast room, etc. With the free breakfasts and light dinner, we might actually save money living in the corporate housing.

If it feels too cramped, we can also join a gym, go to the library, work at a cafe with wi-fi or rent some office space for work to have other places to go.

Thanks again to all who posted for helping us think this through. The right answer for us seems obvious now.

 

[REWahoo]

I'm a bit late to this thread but having bought prior to selling once in my life, I'd never do it again. Like ABinH, it took us far longer than anticipated to sell our house and paying two mortgages month after month was not something I'd ever want to repeat.

 

[MichaelB]

So he agreed that selling first was the right thing to do. So thanks for all the great advice. I appreciate that many of you had good reasons for selling second and appreciate you sharing your experiences with me, but for us in our current market with relatively high real estate prices compared to the rest of the country, crazy month to month and year to year price changes, rising interest rates and maybe being in a bubble market I just wasn't comfortable owning two houses at one time.

Wise choice.

 

[48Fire]

It's tough with a dog (I don't have one). Maybe you could board the dog and go over there a lot and visit with the dog.

In our family, I would be more likely to be boarded rather than our dog. At least I still generate some income.

 

[48Fire]

We want to downsize, and I could use some of your collective wisdom on how to go about it. We are currently in a bubble area and would like to sell before things burst. I don't see the current appreciation rates as sustainable.

We are not sure if it is better to buy the next house first, or sell the one we have first, move to temporary housing and then look for something to buy. We have a dog and work from home with various computer set ups, so moving twice and living in cramped temporary quarters without any dedicated office space isn't ideal.

On the other hand, home prices are very expensive here, so it is a bit scary to have what to us is a lot of money tied up in two houses. Part of the reason for selling is to lock in our gains and reduce our real estate exposure. Houses have gone up or down in price by over $25K in just one month in the area where we are now. The house we buy next will cost probably half as much as the one we own currently, so if the bubble busts our downside will be more limited.

I think it is safer to sell the one we have now first, the higher priced one, since that is more subject to wilder price fluctuations. That way we aren't funding two households for the overlap period. The downside to that is we may not find a house we love in the next few months after we sell ours. If we buy first we could take our time to buy the perfect house and then sell ours later.

I am leaning towards selling first because of the bubble prices. If we sell first and the bubble bursts we come out ahead buying the second house. If we sell first and price jump more we come out behind, but I think interest rates are more likely headed up than down, which would favor selling first.

Any advice is appreciated.

I would suggest that you sell first, unless you can take the financial risk. We never did that in the past, but with our downsizing last year and a soft market, we sold first.

The downside was that it created a lot of short term stress, since the new owners wanted the house in four weeks. But we sold them a lot of our furniture. We limited our search to houses that we could move into quickly to avoid the double move. We thought about renting, but it was cheaper to buy with rates low. Plus, we had a dog, too, so rentals were an issue, and a fenced yard was a priority.

On the positive side, the urgency we created to downsize worked well, too. Yesterday my wife was discussing our big old house we left, and I asked her if she wanted me to buy it back, and she said "not a chance!" Downsizing was one of our best ER moves, so I would encourage you to do it.

 

[daylatedollarshort]

On the positive side, the urgency we created to downsize worked well, too. Yesterday my wife was discussing our big old house we left, and I asked her if she wanted me to buy it back, and she said "not a chance!" Downsizing was one of our best ER moves, so I would encourage you to do it.

We are pretty committed to downsizing. All the Internet blogs and forums on ER, slow travel, minimal living, etc. and happiness studies have opened our eyes that with our particular hobbies and interests we would really be happier having less stuff, less house expense, a lock and go place to live, and more free time.

We just haven't agreed on how to tackle the actual sequence of the move until now.

 

[CoolChange]

Corporate Housing Research

I priced out the cost of staying at a two bedroom, pets allowed, furnished corporate type apartment compared to how much our current house costs and showed it to DH. He was concerned that the corporate housing would cost too much money to stay in if we sold first and he didn't want to have to move twice.

If we stay at a furnished 2 bedroom suite type place we can put the furniture from the house in a pod and we only have to pack up once. Plus with the corporate housing we no longer have to pay separate amounts for property taxes, Internet, utilities, etc. and we can invest the money from the current house. So in the end the corporate housing isn't a bad deal at all. Plus we get the gym, pool, maid service, etc.
....

Can you share any pointers regarding how you approach this research?

I have considered this in the past under different circumstances; but, in most areas, realtors/brokers are not much assistance and rates available form the web are not what I would call reasonable. ($3000+/month for a Residence Inn in Houston for example.)

I have not found a good way to get a realistic estimate of what something like this would cost me across town, much less in a different city, without doing considerable leg work

 

[daylatedollarshort]

Can you share any pointers regarding how you approach this research?

I have considered this in the past under different circumstances; but, in most areas, realtors/brokers are not much assistance and rates available form the web are not what I would call reasonable. ($3000+/month for a Residence Inn in Houston for example.)

I have not found a good way to get a realistic estimate of what something like this would cost me across town, much less in a different city, without doing considerable leg work

I added up our current annual mortgage interest, property tax, cable, Internet, utilities, home insurance, repair and tree trimming costs and divided by 12. If we sell the house we can invest the money from the house and earn interest. Plus we get free breakfast and happy hours, which DH says the last time he stayed at one actually had snacks enough for a real meal.

The rates at Residence Inn type places are all online at places like Kayak. We used the rates for one a bit out of town so the prices would be cheaper, but we don't commute to jobs so we are okay with that.

It really depends on your local Residence Inn type rates, current house / breakfast expenses and how long you think it will take to find a new house if this would work out for you.