Sell or Buy First?
Should you wait for the right home to come onto the market before putting your current home up for sale or should you Sell first and then go out and find what you want? The Chicken or the Egg Conundrum!
Since the real estate market is seldom in equilibrium - when there is a balance between the number of active buyers and the number of homes available to them - you are probably going to encounter the chicken and egg decision any time you want to buy or sell. Evaluate your options and get moving in one direction or the other.
If you decide to SELL First:
- You know exactly how much money you have from the sale of your first home and can comfortably choose your next home's price range and negotiate accordingly.
- With cash in hand you can immediately make firm offers on any property that meets your needs. If a property comes up that is your dream home you can be the first person with an offer.
- You have more negotiating power! When Sellers turn down or counter an offer that is conditional upon the sale of a home, they usually believe that the Buyer will come back with a more serious offer if and when the Buyer's home has finally Sold. Sellers in general, give much more serious consideration to unconditional offers since they usually realize the Buyer does have other options and may move on and pursue a different property if their final offer is rejected.
- If the right home is NOT currently on the market when you finally Sell, and nothing comes up before your closing date, you may have to find alternative accomodation until something appropriate comes along.
Things You Should Consider:
- Do I have reasonable options available if my closing dates do not match and I cannot move into my new home the same day I move out of my current home?
- How would my family react to the stress of having to rent for an unknown period of time? Do they allow pets, if I have to rent?
- Have I gone to the bank to review my financial situation and the cost of bridge financing?
- What is the cost of a double move?
- If you are only interested in moving if a very specific property comes up, buying first ensures you do not miss out on the perfect opportunity.
- If a unique or underpriced property comes onto the market and you do not think it will last long, wrapping up the deal ensures that you get the property before someone else does!
- If your current home does not sell quickly enough you may end up having to finance both homes and carry the extra debt until you do Sell.
- You do not know what the final Selling price of your current home will be. If your budget is tight, this could affect your financial decisions. While you can get appraisals and market evaluations of your current home's value, nothing is for sure until you actually get an offer. Market conditions can change and if you are not properly priced your home may not sell quickly.
Things You Should Consider:
- How would you react to the stress of owning two homes at once?
- Would you have the financial reserves to do this?
- How would you feel if you were eventually forced to sell your current home at a fire sale price?
- Have you considered the legal ramifications if you do not close on your new home?
Another option involves making your Offer to purchase conditional upon you being able to Sell your current home within a specific period of time. Conditional offers usually include a clause that allows the Seller to continue to market his or her home while you try to sell your home. If the Seller receives another bona fide offer, they can accept it and ask you either to remove your condition and firm up or to step aside and release yourself from the deal. While conditional offers do not provide all of the advantages of the first two options, they do offer a reasonable compromise for those uncomfortable with the drawbacks associated with either Selling or Buying first.
- You do not have to sell your current home until you have found and negotiated an acceptable price on your next home.
- You have less negotiating power. Sellers sometimes turn down or counter an offer that is conditional upon the sale of a home. There is a general impression that Sellers give less consideration to conditional offers than they do to firm ones. Some Sellers feel that the Buyer will come back with a more serious offer if and when their current home has finally Sold. You may end up having to pay a bit more for the house in order to get your conditional offer accepted and be first in line.
- Another Buyer may make an offer and BUMP your offer before you have Sold your current home, putting you back to looking for your next dream home.
- You cannot withdraw your conditional offer until the time set out in the condition has passed. This could be frustrating if a better home comes along and you want to put an offer on that home!
Information located on this site is from sources believed to be reliable but should not be relied upon without verification. The Publisher assumes no responsibility for its accuracy.