Selling your home is relatively easy right now in this seller’s market. But then you might be homeless for a while.
If you’re selling your home, chances are you’re looking to buy one, too. With scattered options, sellers aren’t left with much to choose from at the moment, real estate firm Redfin says.
“It’s a seller’s market, but the catch is, most sellers need to buy as well,” says Eileen Lorway, a Redfin real estate agent. “Sellers who are buying need to think outside the box a little bit. It’s not easy.”
What to do first: sell or buy?
Home sellers don’t always have to buy — at least not right away. In this market, there are a few other options. For those looking to upgrade or downsize, it’s still best to sell first, buy later.
“I encourage sellers who are also buyers to think about selling first,” Lorway says. “They should consider temporary rental options, or moving in with relatives after they sell. Then they will be able to take the time they need to find their dream house, know exactly what they’ll have to work with financially, and won’t end up adding unnecessary contingencies to offers, which will give them a better chance to get the home.”
Since homes are selling fast, you can get a decent return on your investment. With that, you can take some time to build your offer for your next home, even if your next one doesn’t come around right after selling.
You can still buy with less
Despite a drying up market where there isn’t enough inventory to match the demand of potential buyers, it’s easy to imagine that current successful buyers are paying top dollar for their homes. It turns out you can still get a decent price for your home, and you don’t necessarily need to put down 20 percent to get it.
“Half of agents reported that the typical down payment for successful buyers in their market was less than 20 percent, meaning there are other ways to make an offer competitive,” Redfin says. An agent says it’s less about the amount and more about the quality of the offer being made.
As rising mortgage rates are already hurting some potential homebuyers, it could end up being a huge reason many don’t jump into owning a home this year. Home values rose 7 percent in 2016 and they’re expected to rise 4.6 percent this year. These increases can severely impact how much you’ll pay for your home overall, which can make you question if you can afford the rising costs.
Make sure you’ve got a bigger financial cushion and realize you may need more in some areas over others. There’s still plenty of alternative ways to get a mortgage without putting down the standard 20 percent. If you’re committed to buying a home this year, explore your options to make sure you have a solid plan for what you can afford. Just because buying a home sounds nice in theory, it may not be practical within your budget.
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