Should I Buy Before I Sell My Home?
Throughout the state of Colorado homeowners are asking “Should I Buy Before I Sell My Home?” This common question is on the minds of many residents with incredible dilemmas spreading across the country. My team put their ‘Detective’ hats on, pulling out the magnifying glass and examining this concept closer. Here is what we found.
Luxury and Vacation Properties are Not in the Same Category
There is no mystery the housing market is on fire with homeowners outbidding one another and inventory SEEMS EXTREMELY-scarce. However, the luxury and vacation properties are not in the same category where the last two months have been booming in sales across places like Loveland, and the rest of Northern Colorado. But whether a homeowner should buy a home FIRST, selling the previous one afterward continues to be front and center of discussion. While these are suggestive options, the choice is up to you. More importantly, we want you to know you are not alone.
Rental Units are Gaining Traction, But May Not Be Practical
Since homes are scarce in some places more than others, buying first may make the most sense. Rental units are gaining traction as many buyers are unable to find a home by the time the last property closes escrow. Since this is happening across the state, monthly leases are rising. That is if you can even secure a place at all. Not to mention, most of Colorado rental properties want an 18-month lease agreement which may not work for you. Therefore, buying first; then selling may be your best option.
Lumber and Materials are Skyrocketing Causing Possible Delays in Construction
Next, let’s look at the cost of lumber and materials skyrocketing across the nation. New construction could halt without correct supplies driving newer homes up. If you are looking to buy land, and want to build on acreage, it seems more beneficial to get that design off the ground; in the event things could delay. Most new homes take up to 1-year to complete but with some of the recent events like cost of gas, lack of supplies etc., it could take longer. Knowing this info going in may help determine your goals.
Who is Buying All NOCO Properties?
Indicators show resort style homes are being snatched up by investors from China and Dubai. They understand the value of our mountain properties, making these home investments attractive. Also, places like Telluride and our Ski Towns are something all capitalists are keeping a close-eye or adding to their portfolio. Places like Loveland, Colorado is also valuable but since we don’t have the same level of tourism, it’s not tapped in just yet. (Lake communities inevitably will be next) Economic developers predict lake home fronts and estates are highly sought-after and will be for years to come. No matter where you’re at, securing the next residence is suggested, prior to selling.
What About Home Loans on Two Properties?
Depending on the lender and the time you may have lived in your home, buying while paying on a current mortgage IS possible. Investors do it all the time making the banks provide a solution. It is always a smart thing to weigh out your options with a mortgage broker or loan officer to ensure you’re solving any problems prior to selling and buying.
Income and Time
Those who have been in a home for less than a year may have to speak with their accountant or tax pro. If you fall into a high-income bracket, you won’t have too much to worry about, as most banks approve a second mortgage with debt-to-income ratios. We recommend speaking with your financial advisor as a best practice. However, you are always welcome to reach out for further insight or direction.
Today’s Market the Average Closing is 42-Days
This means you won’t have much time to get moved when the prospective home buyer goes into escrow. When you know the real estate agent or professional who studies the market and understands how to maximize time & investment, you have the ‘Secret Sauce.’ Most times, agents are working with clients, looking for your type of home in a desired location. He/she will put the right buyers in touch with the listings sometimes before it even hits the open-market. Meaning the REALTOR® can tell clients about your property before listing on the MLS helping you close faster providing things go well. There is always possibility of an occasional roadblock. With experienced and knowledgable professionals most transactions are complete.
Less Negotiation and Bidding Wars
Sometimes, agents can place your house with clients who have a pre-approval with a lender, leading to less negotiation and potential bidding wars. Good REALTORS® are always connecting the dots with home buyers and sellers before listings ever take place. Therefore, if you are looking to sell your home, be sure to list with someone who has a good reputation and a BIG book of business.
What if I Only Want to Buy Land Right Now?
Many owners who have built equity in their current homes use the funding for a parcel of land or acreage on the Front-Range. These folks dream of retiring in the mountains or on a farm and want to purchase land prior to building. In this case you most-likely will not need to qualify for two mortgages. Before you open your checkbook, take a peek at Investopedia’s key tips:
- Getting a land loan creates a fresh set of hurdles applying for a mortgage on a house.
- Lenders require surveyed boundaries, and you’ll need to check zoning and land-use restrictions on the property, as well as access to utilities and public roads.
- The more improved the land, such as a build-ready lot, the lower your borrowing cost.
- The best loan sources include seller financing, local lenders, or a home equity loan.
- Rural land may qualify for a USDA subsidized loan.
- For best advice, speak with your accountant or tax pro.
Be sure to cover all these steps with your agent or financial advisor for any additional advice.
There Has Never Been a Better Time in History
There has never been a better time in history to buy a home, but before you do, make certain everything aligns in your favor. As with any large purchase or transaction, there are always chances for delay. To answer whether you should buy a home before listing or selling your current residence, most signs point to Yes. With the lack of inventory on the market, sellers are making giant profits on their equity. The other side to the story is buyers are looking to move, NOW, where real estate has never been a more positive accession.
What to Factor?
Factor in things like mortgages, tax gains play a role in any homeowner’s decision. Therefore, we suggest having a conversation with an accountant or licensed & experienced real estate agent or broker. By taking these precautions and learning what your options entail, you’ll be well on your way to make a wonderful choice.
In the meantime, keep your eye on the latest release of articles and our social media for important updates. Until then, Happy House Hunting!