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Unless you are an investor, having 2 house and 2 notes is nothing short of scary. Many homeowners find themselves trying to avoid this dilemma when trying to buy one house and selling another. The time frame has to be just right, or, 2 notes will be the challenge that they will have to falter through. How does it happen, and can it be avoided? Let’s discuss.
How does it happen?
Many homeowners, for whatever reason, have to move during their lifetime. Gone are the days of staying in one house for over 50 years. While it still happens, it is happening more rarely. What we find is that homeowners are staying in their homes under 10 years on average. There is either a job transfer, a family is growing, or a family is shrinking. And sometimes, there is a change in the neighborhood, it becomes overgrown with crime, or the dynamics that brought a homeowner to a neighborhood has changed, where the neighborhood just isn’t quite the same. In any event, the decision to move becomes inevitable.
Current homeowners know that it is a balancing act between selling their current home and buying a new one. They absolutely don’t want to have to pay 2 notes on 2 houses. The question is: Which one do you do first? Perhaps other experts will differ with me, but I don’t think there is a magic solution. Why? Because there are so many factors at play. Obviously, there is the need to prepare the house that is currently being occupied while looking for the next house becomes an outright challenge if for no other reason, the rest of your life continues on as well. And don’t let there be a situation of trying to avoid a 2 notes and 2 houses when one house is 100’s of miles away from the other.
How can we avoid 2 houses& 2 notes?
A. One consideration that Mr./Ms. Homeowner may take into account is selling their first home, putting everything in storage, renting a home until they find another home. Then, they would buy their next home, possibly breaking a lease, or paying out the least in advance, and then getting their things out of storage. But that may cost more in the process that it’s worth.
B. Another consideration that some homeowners may take into account, albeit begrudgingly, is to rent the current house for a year while still having it on the market. That way, an income is being produced while the owners become acquainted with their second home. This works best if you have a property manager. Or, you can choose to travel back and forth to address issues associated with renting your home. Additionally, if your home is on the market, your Realtor® will play an important role as well in showing your first home to perspective home buyers.
While renting the current home may help with the first note, it should also address any potential repairs. So make sure that the rent exceeds the current not by at least 10% a month. You may also want to check with your neighborhood association regarding renting your home in certain subdivisions, as this may violate some covenants. Some Homeowners Associations sometimes impose violation fees. Renting is an option for some, but not everyone.
C. Many homeowners want to play their cards right down the middle. They want to chance putting their home on the market and finding the perfect home and hoping that one transaction can be coordinated well enough to offset the other. Have I overused the word “rarity” or any form thereof?
The homeowner who is interested in selling and buying, almost simultaneously is virtually orchestrating/pleading, and in some cases, demanding that everyone is doing their part to make this happen. That is a big demand, and given the interaction of humans in general, good luck with that. But it can happen, and here are a few tips to try to get this to work:
What we have just discussed here is how homeowners can work to avoid having to pay 2 notes on 2 homes, especially if the homeowner is looking to buy another home while living in the first one. We discussed selling the 1st home, putting personal items in storage, and then renting another home until finding a desired home that we ultimately decide to buy. We also discussed renting out the current home for a year until the seller settles into their new home. Finally, we discussed that if the seller works with the team involved in the buying and selling process, including their Realtor(s)®, the homeowners of the 2ndhome, the title companies and the buyers and sellers on both sides of the process, it is very possible that Mr./Ms Homeowner can avoid paying 2 notes on 2 houses. Don’t forget, Make Your Best Offer.