Dustin comments on Rational Home Buying - Less Wrong

99 Post author: Yvain 27 August 2011 12:15AM

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Comment author: brazil84 29 August 2011 05:51:00PM 0 points [-]

And you agree that even with 45k in cash sitting around, there is a decent chance that our hypothetical home buyer might need to sell the house in a hurry?

Comment author: jhuffman 29 August 2011 05:57:43PM 0 points [-]

He would have a little more incentive but the costs of a house sitting vacant are pretty straightforward and anyone would have an incentive to avoid those. This could come about unexpectedly due to a lay-off but could come about for other unexpected reasons as well. It doesn't really matter if he's laid off or not, these facts remain:

  • You should have a reasonable cushion so that a temporary interruption in employment does not mean foreclosure and financial ruin
  • If you have to move, you want to sell or rent your house as soon as possible. Other things equal, buying with an eye towards the re-sell market is wise.
Comment author: brazil84 29 August 2011 06:18:15PM 0 points [-]

To a large extent, I agree with both your points. The reason I was asking about the size of one's emergency fund is to demonstrate that for your typical person, you can't just rely on having an emergency fund to avoid the possibility of having to sell your house.

The sensible (dare I say "rational"?) thing to do is to rely on both strategies, i.e. have extra financial resources AND try to buy a house which will be easy to sell if you need to.

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