A common question that we get is some form of this: “I own my Philadelphia home but am interested in selling it and using the equity to upgrade to a larger home. Should I pick out my new home first and then list my home, or should I list and then pick out the new one?”
The answer, of course, is that it depends on many factors. However, most people who are asking this are doing so because they do not have the means to purchase a new home (down payment + closing costs) and to potentially carry both homes for very long.Â Therefore, you should consider the following:
- How much money do you have? If you are trying to buy before you sell (or have an agreement on your current house), you can’t guess what your house is going to sell for and consider those proceeds as money that you can spend. What if it doesn’t sell as quickly or for as much as you hope it will?Â Can you still follow through on your new home purchase?
- Homes take longer to sell these days. If you pick out your new home, when will yours go under agreement? Next week? In three months? A year from now? Can you afford to carry both homes for an unspecified period of time?
At the end of the day, when you remove emotion from the equation, buying a home is a financial transaction and really is no different from buying your groceries. When you go to check out, you only get your food if you (a) have enough cash to pay for it or (b) can borrow the money on your credit card. Since most people are borrowing money to purchase real estate, it is imperative that you sit down with your agent to discuss the pros and cons of every approach.
[tags]phillyfeaturedblog, philadelphia, real estate, realestate[/tags]