You have owned a home for a long time, but now you are looking for a second residence in a Delaware neighborhood to settle down in. It is possible you will find a new house to your liking, but your old home has not yet found a buyer. Going through with purchasing the new home is an option, but one you may want to take with caution.
The Motley Fool explains why some homeowners sell an old home first before going through with the purchase of new real estate.
Your old home could linger on the market
If someone has given you an offer for your old house, you probably feel you can purchase a new home confident that your current residence will have a new owner. However, if you do not have a buyer lined up, you run the risk that your old home will sit on the market for many months or longer, particularly if the housing market is in a slump.
You could incur burdensome expenses
Once you have bought a new house, you will start paying costs related to your new residence. These include:
- Mortgage payments
- Property maintenance
- Utility bills
- Property taxes
- Possible repairs and improvements
These costs will add to whatever expenses you pay on the residence you still own. If you do not have the financing to sustain payments on two houses, you could drain your savings and end up deep in debt.
A contingency may provide a solution
One alternative is to make an offer on a new home with a contingency that conditions your offer on your old house selling. This is risky because the seller might choose a buyer who is ready to put down an offer with no conditions. Still, some buyers are fine with a selling contingency if the buyer makes a bid for the home larger than the asking price. Your financial situation should factor into whatever option you choose.