How To Switch Houses Without Losing Your Shirt

Filed in archive Housing on January 26, 2007

These two to the left look happy now, but just wait until that house sits on the market for 8 months and they're carrying two Mortgages because they already bought a new place.

That's the topic J.D. at Get Rich Slowly brings up today, and it's a good one.

The whole problem with buying and selling houses is that once you're past your first home, you're generally moving from one house to another house, and you need to figure out the best way to make that happen so that you don't go broke or have to take out a loan to bridge the gap. I've known more than one person who's made the rash decision to buy a new home, or start building one, on the assumption that it wouldn't be hard to sell the old one, then 8 months later... It might work for some people, but overall I think it's a big mistake to even start looking very hard until you're pretty sure your house is sold. (Sometimes people just get stuck when they have to move for a job; that's a different story.)

I've only had to deal with this once, but I'll share my experience to add to those J.D. mentions. In my case, we put our house up for sale with the stipulation that we wanted three months between the sale agreement and the close. That way we'd have time to look for a new place in the city we were moving to, and not feel completely rushed. This of course closed us off to some potential buyers who needed a house faster. On the other hand, it was appealing to others who wanted some time to sell their home before taking on a new mortgage (of course they shouldn't have been looking at our house until they'd sold the old one, but that was their problem, not mine).

In the end we had a decent window to find a new home and then go through the negotiation process. Although, truth be told, we still ended up feeling a little rushed to make a decision and our need of a house (since our other was already spoken for) probably hurt us a bit in negotiations. After all, we had to live somewhere, and we weren't about to rent and deal with putting our stuff in storage, especially as we had a fairly young baby at the time.

So, that's how we did it. Feel free to add your story here or over at Get Rich Slowly.