A Florida homeowner recently asked on Reddit: with about four months of housing supply in their market, homes are selling on a normal timeline, not overnight. So if you are moving up, do you sell your current home first or buy the new one first?
It is one of the most common questions I get from move-up buyers in Stuart and Port St. Lucie. Here is how I walk clients through it.
Why the order matters
Buy first, and until your old home closes you are paying for two: two mortgages, two insurance policies, two sets of utilities, and two property tax bills building up. With Florida insurance costs where they are, that adds up fast.
Sell first, and you avoid carrying two homes, but you need a plan for where you will live between closings.
When a market has around four to six months of supply, homes usually still sell, but it can take a couple of months. That is why most of my move-up clients sell first, or at least get their current home under contract before they commit to the next one. You can see how fast homes are selling right now in the Stuart market report and the Port St. Lucie market report.
Options in between
1. Sell with a rent-back
You close the sale, get your money, and rent the home back from the buyer for a set time, often 30 to 60 days, while you finish buying. Get the terms in writing: rent, deposit, move-out date, and who covers repairs and insurance during the rent-back.
2. Ask for a longer closing
A 60 or 90 day closing on your sale gives you time to find and close on the next home. Some buyers will agree, especially if the price and terms are strong.
3. Buy with a home-sale contingency
Your purchase depends on selling your current home. Sellers are more open to this when the market is slower, and less open when they have several offers. Pricing your current home right, and having it listed or under contract already, makes your offer much stronger.
4. Bridge loan or HELOC for the down payment
A bridge loan or a home equity line of credit on your current home can cover the down payment on the new one, so you can buy first without waiting for your sale. Set up a HELOC before you list, because lenders generally will not open one on a home that is already for sale. And make sure you can afford both payments for a few months in case the sale takes longer than you hope.
Two Florida costs people forget
Doc stamps on the deed
Florida charges documentary stamp tax on the deed: 70 cents per $100 of the sale price outside Miami-Dade County. On a $450,000 sale that is $3,150. In most Florida counties the seller customarily pays it, but it is negotiable, so include it when you figure your net from the sale. See what you will net when you sell for the full list of seller costs.
Homestead portability can save you a lot
If you have had a homestead exemption on your current Florida home for years, its taxable value is probably far below its market value, thanks to the Save Our Homes cap. Portability lets you carry that accumulated savings, up to $500,000, to your new Florida homestead, as long as you set up the new homestead within three years of leaving the old one.
On a move-up, that can mean a much lower tax bill on the new home than a buyer coming from out of state would pay. You have to apply for it: file the portability form with your new county's property appraiser along with your homestead application, by March 1 of the year you want it to start. Florida's new Amendment 3 homestead changes add to the savings; I explain them in Rent or Buy on the Treasure Coast? What Amendment 3 Changes.
Frequently asked questions
Is a rent-back risky for the buyer of my home?
It can be, which is why it should be written into the contract with a clear move-out date and a deposit. Many lenders also limit how long a seller can stay after closing, so check with the buyer's lender early.
Can I use my homestead savings if I move to a different county?
Yes. Portability works anywhere in Florida, from one Florida homestead to another.
What if I buy a less expensive home?
You can still port part of your savings. The amount depends on how the new home's value compares with the old one, and the property appraiser figures it when you apply.
Related reading
- Got a builder incentive? Smart ways to use it, if your next home is new construction
- What buyers should check about flooding before buying in St. Lucie County
- Buying a condo in Stuart: what to check
This article is general information, not legal, tax or lending advice. Tax rules and lender requirements change, so confirm the details with your lender, the property appraiser and a tax professional.
Moving up on the Treasure Coast?
I can price your current home, map out the timing, and help you line up the next one so you are not stuck paying for two.
Questions? Call or text Wayne at 772-600-4836 or email Wayne@Homesaverrealestate.com.
Wayne Gebhardt, Broker, Homesaver Real Estate LLC, 395 SW Sally Way, Stuart, FL 34997