Unless you’re a first time home buyer, chances are that you’ll want to sell your current home before buying a new one. Even buyers who can afford to pay two mortgages at once (and can get lender qualification for two loans) don’t want the burden of double mortgage payments. In an effort to avoid this double mortgage dilemma, many buyers assume that they should go ahead and list their current home and wait for it to go under contract before finding the next home to purchase. Theoretically, this plan makes perfect sense.
However, in markets like Niantic, Connecticut, this strategy will more than likely put you in a tougher position. Here’s why.
It’s Easier to Sell a Home Than to Buy One
In my many years of real estate, I’ve never seen a sellers’ market this strong. The best new listings sell quickly, often in multiple offer situations. We’ve written on our blog before about the reality of being a buyer in a strong sellers’ market, so I don’t want to belabor the point.
Given the current real estate climate, a seller should assume that her home will go under contract within three or so weeks if:
It’s priced well from the start (meaning that price reductions are not needed to get plenty of traction with showings and offers).
It’s completely ready for showings (see our check list for getting your home ready for showings).
There are no outstanding repairs that need to be made such as a leaking roof or water/termite damage.
It’s priced under $500,000. This price point depends on the area. However, listings that require a jumbo loan typically take longer to sell since there is a smaller pool of buyers with this budget.
If you’ve worked diligently with your Realtor to get your home ready to sell – and if you’ve priced it competitively – it should sell fairly fast. Other factors like public schools can affect resale, so your Realtor should be able to give you a realistic time frame based on the comps for your neighborhood. (In short, some neighborhoods seller better than others.)
We Currently Have a Listing Shortage
You might have seen real estate statistics and graphs that show the dwindling number of current listings. In the past four years, our market has shed over 1,700 listings (that’s about 27%)! When you combine this listing shortage with pent up buyer demand and a quick turnover, buyers are having trouble securing their top pick of homes. What’s worse is that many of these buyers are losing out on their top pick in multiple offer situations, so they have to find back up homes to make an offer on.
With fewer listings to choose from and an increase in multiple offer situations, it’s easy to see why buyers need to secure their new home before putting their current one up for sale. The alternative is feeling rushed to settle for a home that simply isn’t the one you want – or getting stuck between two homes.
You Don’t Want to be Left Homeless
Unfortunately, we’ve seen this scenario multiple times: you think you’ll be able to close on a new home in plenty of time, but instead you find yourself living with friends or finding a short term rental/hotel for a month in order to buy your family more time. This scenario is far from ideal, especially when you add kids to the mix.
No seller wants to close on her home with nowhere to go. You’ll find that you have more control over your time frame if you tackle the bigger obstacle first, and that bigger obstacle is getting a ratified contract on the home you want to buy. If you’re contemplating selling your home and buying a new one, contact The CT Power Team to discuss your options. We’re happy to send you a comparative market analysis so that you can see what your home is worth and how long it should take to sell!