FundRobot » Equity Funds » How to go about buying and selling house at the same time?

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Old   #1 (permalink)
 
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Default go about buying and selling house at the same time

My husband and I are looking for a larger home so we can start having kids in the next few years. We live in a high cost of living area so in order to afford anything larger than we have, we absolutely need the money from the sale of our home to use as a down payment. (What our home is worth and what we owe, it's about 50k we will stand to profit)



It's stressful because there's not much of anything on the market right now, there are literally 2 decent looking homes in our price range and they are either short sale or have repair issues. So we're going to have to wait and keep watching for something to pop up. So my question really is- should we continue to live in our home right up until we find something we love then try to quickly sell ours, or do we sell ours now and get an apartment and have the money in bank so when something pops up we have nothing holding us back from getting it?
The apartment seems easier, BUT what if we don't find anything for another year- we would have made more equity by staying in the home...
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Old   #2 (permalink)
 
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Default go about buying and selling house at the same time

you can't come up with 3.5% down plus some closing costs? no savings?
something is telling me you dont have 9 months of living expenses,,, get your savings together before doing anything in life
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Old   #3 (permalink)
 
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Default go about buying and selling house at the same time

First question for you - have you built in to your estimate the closing costs on both houses? If $50k is the actual amount between what you plan on selling for and what you owe, then you will walk away with something less. Expect that your closing costs (including realtor's commission) will be about 10% of the sale price of the house. And then expect closing costs on the house you buy to be about 5%.

The second question is whether you can qualify for an FHA loan - you may not qualify as a non-first time home buyer, in which case, you will need closer to 10 - 20% as a down payment.

Third, unless you price below market value (cutting into your equity), houses take 2 to 4 months to sell (and if a bunch of foreclosures hit the market, it may take longer). Add 45 to 60 days on to that to get to closing.

My suggestion would be to first, bring in a real estate agent (get three) to give you a true market assessment of the value of your house. Using Zillow, etc. tends not to give you a good estimate (either up or down) - you need a professional who can pull comparable sales and compare them to your house to get a true value (if you get three estimates, either average them or take the middle one - one agent will almost always estimate high to get you to go with them, another will estimate low and then have you price higher so you can negotiate down, and the third should be right in between).

Next, go into a bank/lender and explain what you are doing (up-buying with sale) and have them do two things - see how much you qualify for (pre-approval) and then whether you qualify for an FHA loan (minimum down payment will make this easier).

This should make it easier to make a decision (also, while you have the agents there, ask them to explain contingency offers if you do not know what they are already - have them tell you the upsides, downsides, and how they can be placed and then called).
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Old   #4 (permalink)
 
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Default go about buying and selling house at the same time

There are many complications in attempting to sell your current house and buy a house at the same time.

There are some that would attempt to do both at the same time, using a clause that indicate the sale of this house is subject to the sellers being approved for a mortgage loan and purchasing another house.

It might be that you are able to find a house and is near closing however, your house is still on the market, or the reverse could happen. where your current house is near closing, however, you have yet to find a house to purchase.

It would be better that you sell your home now and get this segment out of the way. You would rent an apartment until you find a house you would feel comfortable in and would want to buy.

Place the proceeds from the sale of your house into a savings account. You would want to keep all the documents of the sale of your current home in the event, you find a home and would need to prove the money you obtained from the sale of your house.. Some mortgage underwriters might request these documents for some reason or the other.

You might consider contacting a local mortgage lender to get yourself pre-approved for the purchase your new house. You would know the amount of money a mortgage lender would lend you to purchase a new house.The amount a lender would lend you would be based on the debts listed on your credit report you are required to pay each month. Your underwriter would then take your combined earnings each month that you have to pay these debts. Using a formula your underwriter would come up with your debt ratio. Your debt ratio should not exceed 39%.

I hope this has been of some benefit to you, good luck.

"FIGHT ON"
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Old   #5 (permalink)
 
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Default go about buying and selling house at the same time

I generally list my place at a good price and then start looking slowly. If I get a good contract, step it up a few notches and find a new place immediately. If I find a place but don't have a contract but think I'll get one soon I'd put in a bid on a new place if I really like it. Of course with or without a contract in hand to have someone buy your place, any bids you put in to buy a new place must be contingent on your place selling. Also without a contract in hand your offer may get turned down but probably not if a slower market.
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Old   #6 (permalink)
 
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Default go about buying and selling house at the same time

Since you need the funds from the sale of your present home before you can buy another one, put it on the market now. I doubt that you will find a seller (of your new home) that will accept a contract that's contingent upon the sale of your existing home. Once your present home is under contract and all contingencies have been met, then you are in a position to start looking. When you find a buyer for your present home you could ask for a longer than normal closing. This would give your time to find another home and get it under contract.
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Old   #7 (permalink)
 
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Default go about buying and selling house at the same time

If you live in high cost area and your equity is only $50k, it is almost like you don't have anything.
Live at current place and get much much more equity. Even if you have kid, just stay there since getting bigger place will just is a big gamble when you don't have equity.
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Old   #8 (permalink)
 
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Default go about buying and selling house at the same time

your states dept. of consumer affairs all laws and how to's on the website.
Easiest is to state in the agreement/ contract to sell that you can remain in the home until your house sells....or that the sell is contingent upon selling your old house...you will then have a place to live...remember to give yourself time to get out....get in...move when you specify that contengy etc.
Getting prequalified before looking helps and requiring a "prequalified buyer (will help avoid you from wasting time with those who can't afford to buy....it will also help you as leverage to ask the seller to lower the price....once doing this you might decide to get a smaller place than you want and can afford ad live in it while you add rooms onto it (ck zoning first) or a 2nd story, ending up with more house than you can afford in the area you want after all area is everything at least to me.
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Old   #9 (permalink)
 
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Default go about buying and selling house at the same time

Thinking that you will be able to sell your home at the last minute in this market is taking a really big gamble. If your area is hot then mark up the property so you have a more substantial profit one that you wouldn't mind taking and renting until you find something - everyone has there own number. Maybe if your area is hot and you mark your home higher and can clear 75k or 100k - that would be your magic number. But i definitely wouldn't play it to the end
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