Correct timing in buying and Selling Real Estate can add up to thousands in savings

Sometimes we are fortunate enough to have a choice on the timing regarding whether we will be selling our existing home before buying our next house. When this timing option is available, the sequence of events and the real estate market conditions you are facing can either cost you money or lead to huge savings. However, timing cannot not always be about money. Sometimes the peace of mind from knowing that your old home is sold before purchasing a new one is priceless.

Lets take a look at a few real estate selling and buying timing examples while making the following assumptions

1. If real estate prices are increasing - we assume they are increasing 0.5% per week across all market segments.
2. If real estate prices are decreasing - we assume they are decreasing 0.5% per week across all market segments.
3. The current value of the home we are selling is $800,000 while the newer house that is being purchased is $1,200,000.
4. The total span for the calculation between buying and selling (or vice versa) in 12 weeks.
5. We are not accounting for the extra carrying costs of owning two homes simultaneously.

IN A RISING MARKET, IT IS GOOD TIMING
FOR BUYING FIRST, THEN SELLING

In a rising real estate market, buying your new home first then selling the older one later will lead to substantial savings. This timing of events enables the buying of the new home before prices increased and selling your old home after it appreciated a little more in value.

Originally there was a $400,000 difference between the two homes, but buying first then selling reduced that difference to $350,658. It's probably good timing too because in a rapidly rising real estate market, if you were selling your home first, then it may take sometime to actually bid and win on the house you want. While in a rising market selling your existing home should be easy because a highly appreciating market means there is lots of demand and not enough supply.

IN A RISING MARKET, IT IS BAD TIMING
FOR SELLING FIRST, THEN BUYING

In a rising real estate market, selling your old home first then buying the new one 12 weeks later can be quite costly. Your original $400,000 spread became $474,013 in a mere 3 months. Selling your home first did not allow it appreciate a little more and then buying the new home later meant that your new house cost you even a little more. This timing of events can create a significant cost difference during hyper real estate appreciation periods. It can even make you 'homeless' for awhile if you sold your home and can't get into contract on a new for sometime.

IN A FALLING MARKET, IT IS GOOD TIMING
TO SELL FIRST, THEN BUY

In a depreciating real estate market, selling your old home first then buying the new one 12 weeks later is the wisest sequence of events. This timing allows you to sell high and buy low. Your original $400,000 spread became $329,947 in a mere 3 months. In addition, you also have the peace of mind that your home has sold and you know the amount before committing to buying another house. Chances are that there will be plenty of homes to choose from and willing sellers to accept your price in such as real estate market.

IN A FALLING MARKET, IT IS BAD TIMING TO
FOR BUYING FIRST, THEN SELLING

In a depreciating real estate market, buying your new home first then selling the old one 12 weeks later is against your best interests. You're buying high and selling low. Your original $400,000 spread became $446,702 in a mere 3 months. There's nothing more stressful in real estate then some selling a home after they already purchased another property and then can't sell the existing home for what they thought was possible. Unfortunately the market does not care when homeowners say, "I need to sell it for this much."

In a flat real estate market timing is no longer as big an issue unless interest rates are swinging significantly in a particular direction. This will of course soon also impact real estate prices. In such events, you may want to adjust your schedule to take advantage of the momentum. Again, timing is great if you have luxury to take advantage of it, but peace of mind is also very much worth saving.