Dont Get Stuck In The Middle Of The Housing Market

(Entering the housing market can be a scary place especially if you need to accomplish multiple tasks.)

You know it takes time to buy or sell a house, so what if you have to do both? Your worst nightmare is obviously getting stuck in the middle of both transactions and having to pay for much more than you are even receiving.

As the “doom and gloom” market reports continue to come in just as regularly as the ones that say the worst part is over, you begin to panic. But there is no need to panic if you know how to control your situation.

The article, “Do the housing loan shuffle” written by Linda Stern on November 25, 2006 and posted on Yahoo! Finance, explains how to conduct a successful real estate transaction even in the most turmoil surroundings.

An uncomfortable, yet common situation plaguing many consumers actively in the industry is when a buyer puts in an offer on a house but is still trying to sell their house, the other seller is getting pushy and the buyer/seller is tuck. What can be done?

“It's a fact. More homeowners are singing a ‘stuck in the middle with you’ duet with their real estate agents. It's scary, because you can end up facing a situation with two houses, three loans and financial ruin. Or, watching the home you want slip away.”

These “bridging homeowners” are in a difficult, nerve-racking situation. Their best option may be to sell their current home as fast as possible.

Contrary to popular notion, selling a home does not take very long to accomplish even in a slowing, buyer’s market.

“In many markets, houses are taking almost twice as long to sell as they did a year ago, but they are still selling in just a few months. In California, where the market can seesaw erratically, houses are selling in 54 days instead of the 30 they were turning over in last year. In popular Monterey County, they are closing in 106 days from when they are placed on the market. In slow-market Columbus, Ohio, houses are sitting for fewer than 100 days.”

So, if you are unfortunately “stuck in the middle,” don’t panic. You have many options and just because a market is slowing does not necessarily mean that it has stopped.

The first thing you will want to do is formulate a budget and calculate how much you are losing each month while you have the additional house; including all taxes, insurance and utilities. Once you know how much money two properties are draining from your monthly income, you can determine how quickly you need to sell your original house. The faster you need to sell, the more money you cut from the asking price.

“Use your financing to buy some breathing room. Sign up for the biggest possible loan you can get on your new home, as rates are comparatively low. That will free you from having to get a specific price for the house you want to sell. Even if you end up getting less than you expected, you still won't fall short on your down payment for your next house.”

You may also want to consider renting out the house you are trying to sell. This will create some much needed cash flow but you need to be ready the strains and demands that come along with being a landlord; such as 24-hour maintenance.

You may also want to desperately drop your asking price to a level far lower than the competition. However, this may come back to haunt you if you discover your neighbor sold for tens of thousands of dollars more just by being a little patient.

But perhaps the most important thing to remember if you find yourself stuck in between two properties is that it is a business deal.

“The market isn't what it was a year ago, so don't beat yourself up if you have to take less money. Once you've completed both halves of your move, you'll forget the pain.”

There are obviously many options to wiggle out of the middle, but whatever you do, don’t panic; just do what is necessary for your financial situation and obligations.

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