Should You Buy or Sell First?
As far as questions go, this is a biggie! My answer is always the same…it depends on you and the market. There is no universal answer.
If you have the cash to buy an additional home then no worries! But for the vast majority, the uncertainties faced with selling and buying another home can leave homeowners in limbo, frozen and unable to decide on the best course of action.
Let's break the problem down into smaller pieces and tackle each one at a time.
Scenario A:
“We are able to borrow the money to buy an additional home”
Congratulations! You are certainly in the minority. There is an inherent risk with owning two properties and you probably don't want this scenario to go on for too long. Be sure you choose a top notch Realtor to market and sell your home quickly so you will cut down on any excess financing costs.
Scenario B:
” We need the money from the sale of our home to buy another.”
Most homeowners are in this position and have four choices:
- Sell your existing home and buy a new home. In most cases you will be able to coordinate the dates to the satisfaction of both parties.
- Sell your existing home and rent until the right home comes along. Two moves, renting and living in a state of flux is not a great scenario. In fact, most Buyers will not choose this path.
- Find your next home and write an offer contingent on the sale of your existing home. At first glance, this seems like the ideal choice, but hold on, there are some hidden problems. The Seller may not be willing to accept the terms of your offer because it is not as attractive as a cash offer. If the seller is willing to accept your offer, you will pay a premium price for the home. In addition, the pressure is now on to sell your existing home. You may choose to sell at a lower price in order to sell quickly. So in the end, you could end up paying more and selling for less. There is more bad news. Your offer to purchase will probably have a clause stating that if the Seller gets a better offer, you're out! So in the end, all of this effort may be a waste of time.
- Find your next home and a possible second. Get your home on the market and monitor the selling status of the home you wish to buy. When you receive an offer on your existing home, have your Realtor insert a clause into the offer allowing you a few days to find another home to buy. You will secure your new home purchase conditional upon the firm sale of your existing home. Now, when your home sells, you aren't out in the cold.
If this sounds complicated, you re right. This is not something that should be attempted without the help of a seasoned professional Realtor ie. don't try this at home.
