Real Estate Frequently Asked Questions

What’s the difference between a real estate agent vs real estate broker?

Most states require real estate sales professionals to be licensed by the state, so that they can control education and experience requirements and have a central authority to resolve consumer problems.

The terminology used to identify real estate professionals varies a little from state to state. Brokers are generally required to have more education and experience than real estate salespersons or agents.

The person you normally deal with is a real estate agent or salesperson. The salesperson is licensed by the state, but must work for a broker. All listings are placed in the broker’s name, not the salesperson’s.

A broker can deal directly with home buyers and sellers, or can have a staff of salespersons or agents working for him or her.

Why should I use a real estate salesperson?

A real estate salesperson is more than just a “sales person.” They act on your behalf as your agent, providing you with advice and guidance and doing a job – helping you buy or sell a home. While it is true they get paid for what they do, so do other professions that provide advice, guidance, and have a service to sell –such as Certified Public Accountants and Attorneys

The Internet has opened up a world of information that wasn’t previously available to homebuyers and seller. The data on listings available for sale is almost current – but not quite. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.

If you’re selling a home, you gain access to the most buyers by being listed in the Multiple Listing Service. Only a licensed real estate agent who is a member of your local MLS can get you listed there – which then gets you automatically listed on some of the major real estate web sites. If you’re buying or selling a home, the MLS is your agent’s best tool.

However, the role of an agent has changed in the last couple of years. In the past, agents were the only way home buyers and sellers could access information. Now agents are evolving. Because today’s home buyers and sellers are so much better informed than in the past, expertise and ability are becoming more important.

The real estate agent is becoming more of a “guide” than a “salesperson” — your personal representative in buying or selling a home.

I have a family friend who is a Realtor. I like her and she is a help but she gives me one price to sell my home for and I think it is too low. So I called another agent who suggested a price more in line with my expectations. Who do I choose?

You might want to consult a couple more Realtors on the market value of your home. Most of the estimates should be in the same ballpark.

It could be that your friend is being more honest with you about the value of your home and the other Realtor gave you a higher number because he already knew you expected it. This is called “Buying a Listing” and is the subject of an article on our web site.

Or it could simply be that your friend is a good friend, but not that great of a real estate agent.

Mixing business and friendships is always risky to the friendship. On the other hand, if your friend is truly competent and was providing wise advice, she may be offended if you ignore the advice and choose another agent.

How are Pre-Qualifying And Pre-Approval Different?

What Makes Up closing Costs?

• Attorney’s or escrow fees
• Property taxes (to cover period to date)
• Interest (paid from date of closing to 30 days before first monthly payment)
• Loan Origination fees
• Recoding Fees
• Survey Fee
• First premium of mortgage insurance (if applicable)
• Title Insurance
• Loan discount points
• First payment to escrow account for future real estate taxes and insurance
• Paid receipt of homeowner’s insurance policy
• Any documentation preparation fees

What is earnest money?

When you make an offer on a home, your agent will ask for a check to accompany it (checks are the same as cash, and the deposit is typically 1% to 2% of the purchase price). Earnest money is made in good faith to demonstrate – to the seller – that the buyer’s offer is genuine. Earnest money essentially takes the home off the market to anyone else and reserves it for you.

The check (or sometimes cash) is deposited in a trust or escrow account for safekeeping. If a deal is struck, the earnest money is applied to the down payment and closing costs. If the deal falls through, the money is returned to the buyer.

Important: if the terms of a deal are agreed upon by both parties, but then the buyer backs out, the earnest money may not be returned to the buyer. Ask your agent about the ways to protect your earnest money deposit and the ways to protect it – such as offer contingencies.

How much do I need for a down payment?

The national average for down payments is 11%. But that figure includes first time and repeat buyers. Let’s take a closer look.

While the broad down payment average is 11%, first time homebuyers usually only put down 3 to 5% on a home. That’s because several first-time home buyer programs don’t require big down payments. A longtime favorite, the FHA loan, requires 3.5% down. What’s more, some programs allow down payment contributions from family members in the form of a gift.

Some programs require even less. VA loans and USDA loans can be made with zero down. However, these programs are more restrictive. VA loans are only made to former or current military service members. USDA loans are only available to low to-middle income buyers in USDA-eligible rural areas.

For many years, conventional loans required a 20% down payment. These types of loans were typically taken out by repeat buyers who could use equity from their existing home as a source of down payment funds. However, some newer conventional loan programs are available with 3% down if the borrower carries private mortgage insurance (PMI).

What kind of credit score do I need to buy a home?

Most loan programs require a FICO score of 620 or better. Borrowers with higher credit scores represent less risk to the lender, often resulting in a lower the down payment requirement and better interest rate. Conversely, home shoppers with lower credit scores may need to bring more money to the table (or accept a higher interest rate) to offset the lender’s risk. There are special programs First-time Homebuyer programs that may allow for lower FICO scores.

How much do I have to pay an agent to help me buy a house?

Home shoppers pay little or no fees to an agent to buy a home.

Here’s why:

For most home sales, there are two real estate agents involved in the deal: one that represents the seller and another who represents the buyer.

Listing brokers represent sellers and charge a fee to represent them and market the property. Marketing may include advertising expenses such as radio spots, print ads, television and internet ads. The property will also be placed in the local multiple listing service (MLS), where other agents in the area (and nationally) will be able to search and find the home for sale.

Agents who represent buyers (a.k.a. buyer’s agent) are compensated by the listing broker for bringing home buyers to the table. When the home is sold, the listing broker splits the listing fee with the buyer’s agent. Thus, buyers don’t pay their agents.

What is a buyer’s market?

A buyer’s market is characterized by declining home prices and reduced demand. Several factors may affect long-term and short-term buyer demand, like: Economic disruption – a big employer shuts down operations, laying off their workforce.

• Interest rates trending higher – the amount of money the people can borrow to buy a home is reduced because the cost of money is higher, thus reducing the total number of potential buyers in the market. Home prices drop to meet the level of demand and buyers find better deals.
• Short-term drop in interest rates – can give borrowers a temporary edge with more purchasing power before home prices can react to the recent interest rate changes.
• High inventory – a new subdivision and can create downward pressure on prices of older homes nearby, particularly if they lack highly desirable features (modern appliances, etc.)
• Natural disasters – a recent earthquake or flooding can tank property values in the neighborhood where those disruptions occurred.

What is a seller’s market?

In sellers’ markets, increasing demand for homes drives up prices. Here are some of the drivers of demand:

• Economic factors – the local labor market heats up, bringing an inflow of new residents and pushing up home prices before more inventory can be built.
• Interest rates trending downward – improves home affordability, creating more buyer interest, particularly for first time home buyers who can afford bigger homes as the cost of money goes lower.
• A short-term spike in interest rates – may compel “on the fence” buyers to make a purchase if they believe the upward trend will continue. Buyers want to make a move before their purchasing power (the amount they can borrow) gets eroded.
• Low inventory – fewer homes on the market because of a lack of new construction. Prices for existing homes may go up because there are fewer units available.

What the first step of the home buying process?

Getting pre-approved for a mortgage is the first step of the home buying process. Getting a pre-approval letter from a lender get the ball rolling in the right direction.

Here’s why:

First, you need to know how much you can borrow. Knowing how much home you can afford narrows down online home searching to suitable properties, thus no time is wasted considering homes that are not within your budget. (Pre-approvals also help prevent disappointment caused by falling in love unaffordable homes.)

Second, the loan estimate from your lender will show how much money is required for the down payment and closing costs. You may need more time to save up money, liquidate other assets or seek mortgage gift funds from family. In any case, you will have a clear picture of what is financially required.

Finally, being pre-approved for a mortgage demonstrates that you are a serious buyer to both your real estate agent and the person selling their home.

Most real estate agents will require a pre-approval before showing homes – this is especially true at the higher end of the real estate market; sellers of luxury homes will only allow pre-screened (and verified) buyers to view their homes. This is meant to keep out “Looky Lous” and protect the seller’s privacy. What’s more, by limiting who enters their home, sellers are given extra security from potential thieves trying to case the home (like identifying security systems, locating expensive artwork or other high-value personal property).

First-time Homebuyers should look for special programs that are available to them.

Homebuyer Checklist

Who pays the Realtor fees when buying a home?

One reasons why buyers ask the question about the need of having a Realtor when buying a home is because they don’t understand who pays the Realtor fees when buying a home.  There are no guarantees, however, in most cases the seller pays the Realtor fees.

Do I really need a Realtor when buying a home?

When buying a home, it’s strongly recommended you have a Realtor.  There are many reasons why you should have a Realtor represent your best interests when buying a home.  Keep in mind, all Realtors are not the same!  When choosing a buyers agent, make sure you know how to properly interview prospective Realtors when buying a home.

Attempting to buy a home without a Realtor can really make the home buying process more difficult.  Having a Realtor is always recommended when buying a home.  One thing not to do when buying a home is calling the listing agent because you don’t want to “bother” your Realtor.  This is one thing that real estate agents hate.

I own a home, should I buy another before selling my current home?

There is truly no concrete “correct” answer to this question.  There are pro’s and con’s to buying a home before selling your current home and the same can be said about selling your current home before buying another.

Buying a home before selling your current home

The biggest benefit to buying a home before selling your current home is the fact that you have a suitable property lined up.  This can reduce the stress and pressure of having to find a home once your current home is sold.  This however also can create disappointment and heartbreak.  If you are unable to purchase a new home without having to sell your current home, you’re purchase offer is going to be contingent upon sale and transfer of title of your current home.  If your current home does not sell in a timely manner, this can lead to you getting “bumped” by a non-contingent buyer and you losing out on the home you’re looking to purchase, which can be devastating.

Selling your current home before buying a new home

The time it takes to sell your current home is unpredictable.  There is no crystal ball that exists that can tell you exactly how many days it will take.  Selling your current home before buying a new home will put you in an ideal position to negotiate on the new home you’re purchasing due to the fact you are purchasing without the sale contingency of your current home.

One risk of selling your current home without buying a new home first is the chance of not being able to have a place to live.  There are options if your current home sellers before buying another though.  A “rent-back” can sometimes be negotiated with the buyer of your current home.  A “rent-back” would allow you to retain possession of your current home for a certain number of days after closing at the expense of paying the buyers mortgage.  A “rent-back” allows for additional time to find a new home.

Should I buy or continue to rent?

Buying a home can be a very solid investment.  This being said, renting can also be a better option for some, depending on the circumstances.  The current interest rates are incredible.  A 30-year FHA mortgage can be locked in at a rate of around 3.5%.  Since the interest rates are so low, it actually can be cheaper to pay a mortgage right now than paying rent.

There are questions that you should ask yourself before deciding to buy a home.  One of the most important things to consider is the length you plan on staying in a home, if you were to purchase.  If the answer is only a few years, it’s likely the better decision is to continue renting.  Another question to ask yourself is whether you are ready to take on the additional “responsibilities” of owning a home.  When owning a home there will be general home maintenance that should be done, are you ready for that?

Buying a home is a great option in many cases, but not always. Check out a Buy VS Rent Calculator to help with your decision.

Should I talk with a bank before looking at homes?

The answer to the question is YES!  There are tons of reasons why you should talk with a bank and get pre-approved before looking at homes for sale.  First and foremost, talking with a bank before looking at homes can help you understand exactly how much you can afford.  There is no reason to look at homes that are listed for $250,000 if you can only afford up to $200,000.

If you’re a first time home buyer, talking with a bank before looking at homes is strongly suggested, as there are many first time home buyer programs available.  These programs can vary from state to state and county to county, so knowing exactly what’s available to you, is critical.

Another important reason to talk with a bank before looking at homes is so you understand exactly what costs are associated with buying a home.  There are many home buyers who don’t understand the difference between a down payment, pre-paid items, and escrows, which can be thoroughly explained by a mortgage professional.  A mortgage professional can give you advice on the type of financing you should be looking to obtain and also whether or not you should request the seller to contribute towards your closing costs, also known as a seller’s concession.

How do I search for properties on the website?

There are many ways to search for properties on our website.

1. You can click on the “Property Search” at the menu at the top of page where you will be presented with several search options:

a. Search
b. Map Search
c. Search for Open Houses
d. Advanced Search
e. Sign Up for email Alerts
2. Almost every page on our sight has a Search Widget in the sidebar.

3. Community pages have a search for tht community on the specific page along with a Search Widget in the sidebar.

I have to make a choice between an updated home in an older neighborhood or a newer home in a more modern neighborhood. The home in the older neighborhood has almost everything I want and is much larger, but which makes the most sense as an investment?

If your goal is to buy a home for it’s resale value and the one you are thinking of buying in the older neighborhood is at the upper end of values for that neighborhood, then it may not be the wisest choice. If it is similar or lower in price to the others, then there should be no problem, because pricing should be considered in relation to the local neighborhood and not compared to homes in other neighborhoods (for the most part)

Plus, is it a neighborhood on the decline, or are others going to be fixing things up, too, so that it is a neighborhood that is improving? It could turn out to be a very good deal as long as you don’t “overpay” because of the recent improvements.

Remember that you also buy a home for it’s value to you as a “home,” and that is something else you should consider. Which neighborhood would you AND your family feel most comfortable in?

When buying a new home, what upgrades should we go for? What holds the most value? Do we upgrade the lot? Pick more square footage in the house? Add an extra bedroom?, etc.

A lot depends on why you are buying the house. Are you buying it mostly as a home or mostly as an investment? There is a difference.

For the most part, upgrades are high-profit items for builders. They aren’t designed to enhance the value of the house, but make you happier with the house you do buy.

If you are looking at your home as an investment, then you buy from the smaller to medium size in the tract and spend only a minimal amount on upgrades. If you are looking at your purchase as a home, then you select upgrades that will enhance your quality of living.

One rule of thumb is to always upgrade the carpet and padding.

How do I search for properties on the website?

There are many ways to search for properties on our website.

1. You can click on the “Property Search” at the menu at the top of page where you will be presented with several search options:

a. Search
b. Map Search
c. Search for Open Houses
d. Advanced Search
e. Sign Up for email Alerts
2. Almost every page on our sight has a Search Widget in the sidebar.

3. Community pages have a search for tht community on the specific page along with a Search Widget in the sidebar.

I have to make a choice between an updated home in an older neighborhood or a newer home in a more modern neighborhood. The home in the older neighborhood has almost everything I want and is much larger, but which makes the most sense as an investment?

If your goal is to buy a home for it’s resale value and the one you are thinking of buying in the older neighborhood is at the upper end of values for that neighborhood, then it may not be the wisest choice. If it is similar or lower in price to the others, then there should be no problem, because pricing should be considered in relation to the local neighborhood and not compared to homes in other neighborhoods (for the most part)

Plus, is it a neighborhood on the decline, or are others going to be fixing things up, too, so that it is a neighborhood that is improving? It could turn out to be a very good deal as long as you don’t “overpay” because of the recent improvements.

Remember that you also buy a home for it’s value to you as a “home,” and that is something else you should consider. Which neighborhood would you AND your family feel most comfortable in?

When buying a new home, what upgrades should we go for? What holds the most value? Do we upgrade the lot? Pick more square footage in the house? Add an extra bedroom?, etc.

A lot depends on why you are buying the house. Are you buying it mostly as a home or mostly as an investment? There is a difference.

For the most part, upgrades are high-profit items for builders. They aren’t designed to enhance the value of the house, but make you happier with the house you do buy.

If you are looking at your home as an investment, then you buy from the smaller to medium size in the tract and spend only a minimal amount on upgrades. If you are looking at your purchase as a home, then you select upgrades that will enhance your quality of living.

One rule of thumb is to always upgrade the carpet and padding.

How are Pre-Qualifying And Pre-Approval Different?

What Makes Up closing Costs?

• Attorney’s or escrow fees
• Property taxes (to cover period to date)
• Interest (paid from date of closing to 30 days before first monthly payment)
• Loan Origination fees
• Recoding Fees
• Survey Fee
• First premium of mortgage insurance (if applicable)
• Title Insurance
• Loan discount points
• First payment to escrow account for future real estate taxes and insurance
• Paid receipt of homeowner’s insurance policy
• Any documentation preparation fees

How much do I need for a down payment?

The national average for down payments is 11%. But that figure includes first time and repeat buyers. Let’s take a closer look.

While the broad down payment average is 11%, first time homebuyers usually only put down 3 to 5% on a home. That’s because several first-time home buyer programs don’t require big down payments. A longtime favorite, the FHA loan, requires 3.5% down. What’s more, some programs allow down payment contributions from family members in the form of a gift.

Some programs require even less. VA loans and USDA loans can be made with zero down. However, these programs are more restrictive. VA loans are only made to former or current military service members. USDA loans are only available to low to-middle income buyers in USDA-eligible rural areas.

For many years, conventional loans required a 20% down payment. These types of loans were typically taken out by repeat buyers who could use equity from their existing home as a source of down payment funds. However, some newer conventional loan programs are available with 3% down if the borrower carries private mortgage insurance (PMI).

What kind of credit score do I need to buy a home?

Most loan programs require a FICO score of 620 or better. Borrowers with higher credit scores represent less risk to the lender, often resulting in a lower the down payment requirement and better interest rate. Conversely, home shoppers with lower credit scores may need to bring more money to the table (or accept a higher interest rate) to offset the lender’s risk. There are special programs First-time Homebuyer programs that may allow for lower FICO scores.

What the first step of the home buying process?

Getting pre-approved for a mortgage is the first step of the home buying process. Getting a pre-approval letter from a lender get the ball rolling in the right direction.

Here’s why:

First, you need to know how much you can borrow. Knowing how much home you can afford narrows down online home searching to suitable properties, thus no time is wasted considering homes that are not within your budget. (Pre-approvals also help prevent disappointment caused by falling in love unaffordable homes.)

Second, the loan estimate from your lender will show how much money is required for the down payment and closing costs. You may need more time to save up money, liquidate other assets or seek mortgage gift funds from family. In any case, you will have a clear picture of what is financially required.

Finally, being pre-approved for a mortgage demonstrates that you are a serious buyer to both your real estate agent and the person selling their home.

Most real estate agents will require a pre-approval before showing homes – this is especially true at the higher end of the real estate market; sellers of luxury homes will only allow pre-screened (and verified) buyers to view their homes. This is meant to keep out “Looky Lous” and protect the seller’s privacy. What’s more, by limiting who enters their home, sellers are given extra security from potential thieves trying to case the home (like identifying security systems, locating expensive artwork or other high-value personal property).

First-time Homebuyers should look for special programs that are available to them.

Homebuyer Checklist

Should I talk with a bank before looking at homes?

The answer to the question is YES!  There are tons of reasons why you should talk with a bank and get pre-approved before looking at homes for sale.  First and foremost, talking with a bank before looking at homes can help you understand exactly how much you can afford.  There is no reason to look at homes that are listed for $250,000 if you can only afford up to $200,000.

If you’re a first time home buyer, talking with a bank before looking at homes is strongly suggested, as there are many first time home buyer programs available.  These programs can vary from state to state and county to county, so knowing exactly what’s available to you, is critical.

Another important reason to talk with a bank before looking at homes is so you understand exactly what costs are associated with buying a home.  There are many home buyers who don’t understand the difference between a down payment, pre-paid items, and escrows, which can be thoroughly explained by a mortgage professional.  A mortgage professional can give you advice on the type of financing you should be looking to obtain and also whether or not you should request the seller to contribute towards your closing costs, also known as a seller’s concession.

Can I determine how much my home is worth from an internet website?

The answer to this frequently asked question is NO!  Anyone who has bought a home, sold a home, or just looked at homes, has heard of websites such as Zillow and Trulia.  These are also commonly referred to as third party real estate websites.  Third party real estate websites are not local to every real estate market.

These third party real estate websites provide estimates of home values for practically any home in the United States.  How is it possible that a third party website that is headquartered in California or Florida can provide an accurate home value for a home located in Rochester, NY?  It’s not!  These third party websites, such as Zillow and Trulia, use computer generated home values based on calculations and formulas.

These websites providing inaccurate estimates (or “Zestimates”) can create a false sense of hope and lead to frustration.  A home seller who is told their home is worth $20,000 less than the online estimate is going to be understandably upset.  It’s critical that when selling a home, the value is determined by a top Realtor in your local area, not an internet website!

How do you determine how much my home is worth?

There are a handful of methods that Realtors use to determine the value of a home.  The most common method to determining the value of a home is by completing a comparative market analysis.  A comparative market analysis is an in-depth evaluation of recently sold “comparable” homes in the past 6-12 months.  A comparative market analysis, also known as a “CMA,” isn’t a crystal ball that determines what a home will sell for, however, if performed by a top Realtor, it should greatly narrow the sale price range.

A professionally completed “CMA” will take into account many features of not only a home, but also the local area and neighborhood.  Considerations that a professionally completed “CMA” include, but is not limited too:

1. Square footage
2. Number of bedrooms
3. Number of bathrooms
4. Upgrades to kitchen
5. Window quality
6. Roof age
7. Lot features
8. Location; primary or neighborhood street?
9. Style of residence
10. Flooring type

Why is the assessed value different than what you say my home is worth?

Assessed value is not the same as market value  or appraised value.  There are many homes that could be sold for significantly more than an assessed value and others that maybe sold for significantly less.  The assessed value of a home is used for the purpose of taxes in your local municipality.  The assessed value of a home is multiplied by the local tax rate to determine what your yearly taxes are.  The assessed value has no impact on how much your home is worth to a potential buyer in the marketplace.

Unfortunately, there are many home buyer’s who believe that a home that is listed higher than the assessed value is overpriced.  This is the furthest from the truth.  Home buyer’s also question if something is wrong with a home if the list price is much less than the assessed value.  The bottom line is the assessed value has no impact on how much your home is worth.  There are home owners who don’t pay attention to their assessed value, just to find out their municipality has been slowly raising it, year after year, even though the market value hasn’t been increasing.

How much is my home worth?

Most home owners want to know how much their home is worth.  This frequently asked question is another one that cannot be answered with a generalized answer.  One of the best perks to owning a home is the ability to make it your own and improve it how you’d like.  Finding out how much your home is worth is not something that should be done without asking a top local Realtor.

What should I disclose to potential buyers?

When selling a home, it’s important you disclose to potential buyers anything you are aware of in your home.  Nobody likes “getting the raw end of a deal” when it comes to buying a home, car, or anything for that matter.  If you’re aware of defects with a roof, appliance, or home in general, you’re always going to be better off being honest and upfront.  If you’re aware of defects, whenever possible, fixing them before going on the market is best.  This can avoid potential issues and/or lawsuits once your home is under contract, after inspections, and even years after you have sold your home.

What steps should I take to prepare my home for sale?

There are several things you need to know before listing your home for sale!  A frequently asked question from home sellers before listing is what steps should be taken before listing their home.  Not properly preparing a home for sale can put a home owner at a huge disadvantage.

The expression “You never get a second chance to make a first impression” is absolutely true when it comes to selling a home.  When selling a home you must be sure that your home presents itself in the best possible light.  Making sure clutter is at a minimum, freshly painting rooms, installing new carpeting, or ensuring odors are non-existent are just a handful of things that should be done before listing your home for sale. Home staging is also very important when listing your home.

When is the best time to sell my home?

This frequently asked question cannot be answered with a simple or general answer.  Every real estate market is different, therefore, the best time to sell a home will be different from real estate community to real estate community.  In most cases, the spring months are the best time to be selling a home.  The spring months will vary from community to community.  For example, the spring market in the Webster, New York real estate community maybe April, May, and June while the spring market in Coral Springs, Florida maybe March & April.

Since every home sellers situation is different, you should discuss the timing of your home sale with your Realtor.  In some cases, selling a home during the fall and winter months actually maybe better than waiting until the spring real estate market.  This is due to a combination of many factors including lower competition and that serious buyer’s are always looking for a home, just to mention a couple factors.

Finding the right Realtor.

What is a buyer’s market?

A buyer’s market is characterized by declining home prices and reduced demand. Several factors may affect long-term and short-term buyer demand, like: Economic disruption – a big employer shuts down operations, laying off their workforce.

• Interest rates trending higher – the amount of money the people can borrow to buy a home is reduced because the cost of money is higher, thus reducing the total number of potential buyers in the market. Home prices drop to meet the level of demand and buyers find better deals.
• Short-term drop in interest rates – can give borrowers a temporary edge with more purchasing power before home prices can react to the recent interest rate changes.
• High inventory – a new subdivision and can create downward pressure on prices of older homes nearby, particularly if they lack highly desirable features (modern appliances, etc.)
• Natural disasters – a recent earthquake or flooding can tank property values in the neighborhood where those disruptions occurred.

What is a seller’s market?

In sellers’ markets, increasing demand for homes drives up prices. Here are some of the drivers of demand:

• Economic factors – the local labor market heats up, bringing an inflow of new residents and pushing up home prices before more inventory can be built.
• Interest rates trending downward – improves home affordability, creating more buyer interest, particularly for first time home buyers who can afford bigger homes as the cost of money goes lower.
• A short-term spike in interest rates – may compel “on the fence” buyers to make a purchase if they believe the upward trend will continue. Buyers want to make a move before their purchasing power (the amount they can borrow) gets eroded.
• Low inventory – fewer homes on the market because of a lack of new construction. Prices for existing homes may go up because there are fewer units available.

I own a home, should I buy another before selling my current home?

There is truly no concrete “correct” answer to this question.  There are pro’s and con’s to buying a home before selling your current home and the same can be said about selling your current home before buying another.

Buying a home before selling your current home

The biggest benefit to buying a home before selling your current home is the fact that you have a suitable property lined up.  This can reduce the stress and pressure of having to find a home once your current home is sold.  This however also can create disappointment and heartbreak.  If you are unable to purchase a new home without having to sell your current home, you’re purchase offer is going to be contingent upon sale and transfer of title of your current home.  If your current home does not sell in a timely manner, this can lead to you getting “bumped” by a non-contingent buyer and you losing out on the home you’re looking to purchase, which can be devastating.

Selling your current home before buying a new home

The time it takes to sell your current home is unpredictable.  There is no crystal ball that exists that can tell you exactly how many days it will take.  Selling your current home before buying a new home will put you in an ideal position to negotiate on the new home you’re purchasing due to the fact you are purchasing without the sale contingency of your current home.

One risk of selling your current home without buying a new home first is the chance of not being able to have a place to live.  There are options if your current home sellers before buying another though.  A “rent-back” can sometimes be negotiated with the buyer of your current home.  A “rent-back” would allow you to retain possession of your current home for a certain number of days after closing at the expense of paying the buyers mortgage.  A “rent-back” allows for additional time to find a new home.