Monday, August 13, 2007

An Anecdote of the Credit Crunch

A coworker recently bought a new (used) house as part of his plan to downsize now that he's expecting to be an empty nester. But he made the purchase before placing his old house on the market.

Talk about bad timing!!! In the last three weeks he's had no one even come to look at his house. And the local economy is not depressed. Nor is his house in a depressed area.

I suggested that he look at finding a renter. Insurance companies don't like to underwrite empty houses, and he is losing much of his coverage because the house is unoccupied.


Grace said...

I'll bet your friend is kicking himself now. Rules 1 through 10 are all the same: Sell your house first! Then buy your next home!

Looking around to get an idea of what one wants is OK, but getting fixated on a particular home or actually buying the next home before the first home is sold can go so wrong in so many ways.

I think every person looking to move up or to downsize needs to budget for a rental apartment and a storage unit for a reasonable period in between.

EMF (Engineer) said...

My friend is somewhat philosophical about it. He can afford to be right now, as his income will cover both mortgages.

And I know how he feels. When I moved two decades ago, it took 4 years before I was able to get the old one sold. And I had moved to a different city. In my case the old neighborhood turned on me.

In my friend's case, he definitely should have followed your advice. The homes are within 10 miles of each other.