Mar 242008

In 2006 Harris Interactive published a poll indicating consumers’ level of trust in professions. Doctors faired well — if you consider that only 50% of respondents “completely trusted” them and that put them at the top of list! Real estate folks neared the bottom of the list just above stockbrokers, mechanics, lawyers, and insurance agents.

The columnist reporting this explained the mistrust as a measurement of the respondents own ignorance! He somewhat rightly suggests that it is quite natural to mistrust people who know more than we do — particularly if they are trying to sell us something.

This reminds me a bit of the story I heard recently. After examining his patient, the doctor asked “If I told you that you needed an operation, would you be able to afford it?”

The patient replied, Continue reading »

Mar 062008

Given the current market conditions — especially current mortgage rates — “trading up” can make a lot of sense. Just because it makes sense it won’t necessarily be simple or easy! If you’ve dreamed of a bigger home… or more land… it is a good time to get serious!

Most people want to start looking for the new home and in a way, that makes sense. It is, after all, the most exciting part! But to keep the process as stress-free as possible it’s best to sit down (with your Realtor!) and outline a disciplined approach. This will make a few general observations; your situation is going to be very unique.

One method for buying the new home before selling the old is to make an offer on the new home contingent on the sale of the old. In simple language you tell the seller of the new home, “I’m offering to buy your home but not until mine sells.” If the seller accepts that offer you have a contract “holding” the new home, at least temporarily. But the assumption in that is that the seller will accept such an offer. Many times that will not be the case. Or the seller may accept the offer with what’s called a “kick out” clause. Without getting into specifics, this is a clause that allows the seller to terminate his/her contract with you if another buyer comes along.

Another method for buying before selling is to simply proceed with the purchase of the new home and then sell the old. The obvious downside to this approach is you’ll have a cash requirement and then pay two mortgage payments until the old home sells.  That just isn’t feasible for most buyers and lenders are going to expect buyers to qualify for both mortgages if that is the plan. In addition, it will be tempting to make the sale of the old home correlate to the commitment made on the new home. Unfortunately, the market for your old home is not driven by your new home needs.

It certainly pays to do some research. In general terms you want to know what that new home is going to cost you. But to begin serious shopping early is too often putting the cart before the horse. You really want an integrated plan that will get your old house sold and your new house bought.  Most will agree that it’s impossible to time the real estate market, but it is possible to minimize your risks and make this happen with that plan.