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Selling Your Home: Timing Is Everything

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If all is right with the world, you'll sell your house (quickly, of course) to a perfect family who ­promises to love and take care of the property just like you did. Meanwhile, a house that you've had your eye on for three years will just happen to go up for sale on the very day the great family makes an offer on yours.

Your offer on the new home will be immediately accepted, you'll set up an appointment with the movers, and start packing your belongings. Everything will go as planned, and one day soon you'll have settlement on your old home at 9 a.m., your new home at 10 a.m., and be moved into your new house by dinner time.

That's a great scenario, but real life rarely works out that perfectly. Timing is extremely important in buying and selling homes. Improper timing can make the process a lot more difficult. Let's look at some timing possibilities, and see how you might be able to time events to your best advantage.

The Ideal Situation

Adding It Up

Settlement is the final closing of the sale of your home. It is the settling of property and title on an individual or individuals, at which time your lender hands over money to the seller and you assume the mortgage.

Most financial advisors and mortgage counselors recommend that you sell your old home before buying a new one. And selling the old house first has some real advantages.

If you know that your house sold for $175,000, you can better gauge your house search. You know how much proceeds you realized from the sale of your home, and how much down payment you'll be able to make on your new home.

And if you sell your old home before you buy your new one, you're likely to reap the benefit of pre-qualifying for your new property. Pre-qualifying is when you provide the bank with your financial information before applying for a mortgage, and the mortgage counselor tells you just how much mortgage you qualify for.

This allows you to narrow your search of homes, and shortens the amount of time it takes to get a mortgage once you find a place to buy. It also displays to the seller that you're a serious buyer with means to pay for the house.

Selling your house before you have another one, however, also carries some risk. If, for some reason, the buyer wants to move in immediately, you could be left without a place to live for a while.

The ideal situation is to be able to sell your property (for the price you wanted, of course) and set a settlement date that gives you time to find another house before you need to be out of yours. Once you find your new home, you schedule the settlement date for a day or two before, or the same day, as settlement on your old house. This gives you time to move your belongings from one home to the next while still having a roof over your head.

As you know, however, ideal situations often elude us.

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Excerpted from The Complete Idiot's Guide to Personal Finance in Your 40s and 50s © 2002 by Sarah Young Fisher and Susan Shelly. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

To order this book visit the Idiot's Guide web site or call 1-800-253-6476.


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