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Buy or Sell First?

 

If you are considering looking for a new house, and are a current home-owner, then chances are you’re wondering what your strategy should be:  do you wait to find the perfect new home before you put your current home on the market, or do you sell first and then look around?  You have a few options to consider.  Use the following as a guide to explore what might be the best move for you.
 

 

Sell First:

 

There are several benefits to selling your current house before searching for your next home.  Once you have sold your house, you will know precisely how much money you have to work with.  With a concrete price range, you’ll be able to narrow the pool of houses before you begin looking, and negotiate accordingly.  This will allow you to immediately make firm offers on houses that you are serious about purchasing.  You can be first in line with an unconditional offer you know you can afford, and this will grant even further negotiating leverage as Sellers tend to take unconditional offers more seriously. In a slower real estate market, most seller's are reluctant to consider contingent offers that require the buyer completes the sale on their property first, because it could be a long waiting period until the purchase is complete. 
   
 

The flip side of this scenario, however, is that if you don’t find the right property before the closing date of the house you’ve already sold, you may have to look for temporary housing until you do find what you’re looking for.

So, before you opt to sell first, you should determine whether you have alternate, temporary options, in case you have to move from your house before you’ve found a new one. How would you and your family deal with living in a transition home for an undetermined period of time?

 

Conditional Offer:

 

An additional option involves making your offer to purchase conditional upon the sale of your current property within a specified period.  Conditional offers usually include a clause that allows for the Sellers to keep their property on the market and remain open to other offers while you try to sell your home.  If the Sellers receive another attractive offer before you’ve sold your home, they may accept and ask you to either remove your condition and firm up your offer, or to back down from the offer.  A conditional offer forms a kind of middle ground, an area of compromise, for those who are afraid to sell or buy first—but doesn’t hold the advantages of the other two options.

 

One of the drawbacks of the conditional offer is that Sellers tend to take them less seriously, and in a slower real estate market, many seller's reject conditional offers because or the undefined time lines and risk of taking their property away from buyers that may be capable of closing sooner. This leaves you with less negotiating power. Most Sellers will simply turn down or counter a conditional offer.  Even if your conditional offer is accepted, there is no guarantee another Buyer won’t step in and overthrow your offer before you have sold your current home, which would put you back at the starting line.   

 
 

Buy First:

 

Buying a new house without having sold your current home may occur if you are interested in a specific property and will only sell your current home if this property comes on the market.  Timing is everything, and some times grabbing hold of the home before it’s too late proves to be the right decision for many. They have been several occaisions where client that we represent fall in love with a home early in their search process, however they feel that they want to see more properties, that by the time they circle back to the original property it has been sold. 
 
Especially if you are 'moving up' to a more higher priced, larger home, newer home, or a home with greater desirablility and appeal than your present home, you will most likely want to secure the home you wish to purchase first.If the home meets the majority of your requirements, creates the emotional appeal and attachment, and the pricing is beneficial, we recommend you seize the opportunity if it is right for you.
 
Be prepared to do all that it takes to prepare you home most most effectively and be willing to be reasonable on you selling price expectation as to not pave the way for undue future financial pressures. Make certain that before you buy the house you wanting to secure, that you have a very close assessment of the value of the home you need to sell. 
 
If your present home is $600,000 and you are buying a home for $800,000, with good appreciation potential, even if you sell your home for $50,000 discount, at $550,000, if both homes appreciated 10% after 2 years, you sold the first property $50k under it's value but the new property has appreciated $80k, so your net gain is $30k and most importantly you succesfully secured your purchase and sale and you are in the property that is more likely to provde greater appreciation over a long term horizon.
  

We strongly recommend that you consult a financial professional to closely evaluate your situation to best advise you of the benefits and risks associated with each of these three scenarios. As your Realtor we can advise you on the value proposition of the sale and purchase aspects, however we are not intimately involved with your financial affairs.