Ah… One of my favorite questions. Much like a lot of my answers, it begins with “that depends…”
Some questions to get clear on are:
How’s the market where you are buying? Is it a buyer’s market or a seller’s market? How’s the market where you will be selling? Wh
at kind of house are you looking to buy? Is it a “unicorn property” or is it a pretty standard place? The question behind this is “Will you be able to find several good options to buy if you did sell your home first, or….
Will you end up in your in-laws basement and end up sett
ling on a house that you won’t love?” What kind of place are you looking to sell? Are homes like yours selling quickly? Do you need the equity from your current home to apply towards your new home. Could you buy the new home without selling your existing home? (I know that raised your blood pressure and made many of you sweat with anxiety!).
In a seller’s market (where houses are in short supply and selling quickly) or when you are looking for a very specific kind of home; you
might consider finding your new home then selling your other home after you’ve secured the new one. What I mean by that, is finding a great home, getting an offer accepted, and then getting your conditions satisfied. At this point, you’d have a firm date to move into your new home and then you could go sell your existing home with confidence that you have somewhere to go.
Let’s look quickly at the flaws / what can go wrong with the “Buy First” scenario:
Some questions to ask yourself:
Do you need the money from the sale of your home to use as your down payment?
Would the bank allow you to carry two mortgages if you had to?
Get very clear on this. Would you be comfortable doing this if you had to?
What if you don’t get as much money as you hoped when you sell your house? It’s very nice selling a house that you don’t live in. Selling a house you live in can be very stressful. There are showings interrupting your schedule and living in a showhome isn’t easy. It’s like if your life was a non-stop job interview where you needed to be “perfect” all the time. Contrast that with leaving just enough furniture and decorations in the house that it’s nicely staged and Realtors can show with short notice with zero disruption to your life
…. This also allows a larger pool of buyers based on their required closing dates.
Be ready to sell. Have your house ready to go on the market today. Have your pricing dialed in, have your professional photos and measuring done. We have been helping our clients with this and having great re
sults. As soon as you find your perfect home and get an accepted offer, we can launch your listing without delay. Let’s look quickly at the flaws of the what can go wrong if you “Sell First”.
I’ve seen sellers in hot markets sell their homes then go on a very stressful hunt for a new home only to end up on the wrong side of multiple offers, short supply of good homes, and in some cases ending up in stressful situations where they have to choose a home that they don’t “love” or end up moving two times. In some markets it’s even tough to find a rental.
Another thought is that in a rising market, if your move doesn’t happen right on schedule, it wouldn’t be crazy to think that you might even lose equity in the transaction (buying into a higher market price 6-12 months later).
Mortgage rules are always changing, I’ve seen seller’s sell their homes to move up only to be disappointed when the banks tell them “no you can’t buy a bigger better home….” In a buyer’s market, we’d typically suggest for most people the “sell first” option. It is nice to go shopping for your new hom
e, knowing exactly the amount of money that you’ll have. The peace o
f mind knowing that you don’t need to consider 2 mortgages is very nice too! Let’s talk strategy…. What else can we do to have you reach your target with the least amount of stress?
One strategy we’ve employed here is longer closings. If you sell your home with 90 days until closing, it can give you space to find the perfect home without too much stress. If you are looking for a “unicorn” property or a hot seller’s market proceed with caution! 90 days might not be enough time if the property you are looking for is something unique. What about “Subject to sale of buyers home”?
Ah…. That sounds like a nice / stress free solution right? In a buyer’s market you might get away with that, but in a seller’s market that clause will haunt you with every offer.
Imagine, you are a seller in a multiple offer situation and you get two offers that are exactly the same, except one buyer needs to sell before buying, which one will you take? …. Exactly.
Let’s say that you do get an offer (with subject to sale) accepted on your dream home. These are usually written as what’s called a “clause offer”. What that means is that the seller will continue to market the home for sale and when they get an offer, they’ll come to you and say “you have 48 (or 72 or whatever you’ve agreed on) hours to remove all your conditions or we’ll accept the other offer”. It’s like you are openly inviting crushed dreams and frustration into your life. Now, there are a couple little things that more advanced Realtors can do to make this work a little better for you… We’ll save that for another time. Bottom line. Get the right advice and keep your stress to a minimum when you make your next move. When you need some real estate advice, we are here for you!
Sometime soon, we’ll share some tactical tips on other terms and conditions that can keep you on track to a stress-free move in this hot market.
Steve Throndson| Real Estate Advisor
REDLINE REAL ESTATE GROUP
Ph 250.919.3366 |E: Steve@ThrondsonRealty.com