Are you a homeowner considering looking for a new home? Then chances are you’re wondering about 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? To buy or sell first?
You actually have a few options. Use the following as a guide to explore what might be the best move for you. If you sell first… There are some benefits to selling your current home before searching for your next property:
You can be first in line with an unconditional offer you know you can afford. This grants negotiating leverage because Sellers definitely take unconditional offers more seriously than offers laden with conditions.
The flip side of this scenario, however, is that if you don’t find the right property before the closing date of the home you’ve already sold, you may have to consider temporary housing until you find what you’re looking for. In conclusion: before you opt to sell first, plan. Determine whether you have alternate, temporary options in case you have to move from your current home 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? If you buy first…
Buying a new property prior to selling your current home may occur if:
If buying first means you don’t miss out on the real estate opportunity of a lifetime, it may be the best move. However, be careful. Buying another property without being able to sell your current home can put you in the situation of having to finance both homes and shoulder the extra debt until you sell. Sure, you can get a financial appraisal or market evaluation of a home prior to selling, but this doesn’t guarantee the price you’ll receive for the home after negotiations. Since your selling price will be an unknown, jumping into a purchase is a gamble, particularly if your budget is tight. To be safe, make sure you’re familiar with all aspects of the financial reality this scenario creates before you purchase another home.
The worst case scenario is you may be faced with owning two homes at once. What type of financial stress would this bring to your life and how would you deal with it?
Perhaps a Conditional Offer? An additional option to consider is making a conditional offer to purchase upon the sale of your current property within a specified period. A few things to keep in mind:
One of the drawbacks of the conditional offer is that Sellers tend to take them less seriously, leaving you with less negotiating power. In fact, some Sellers will simply turn down or counter a conditional offer. Other Sellers will believe the Buyer will come back with a more serious offer when their home has sold. In the end, you may end up having to increase your offer in order to have your conditional offer accepted and keep your foot in the door. Even if your conditional offer is accepted, there is no guarantee another Buyer won’t step in and overthrow your offer before you’ve sold your current home. Also consider the fact that you cannot withdraw your conditional offer until the end of the period specified in the contract. This means that if a better deal comes along, you will have to wait to jump on it. (Photo: flickr.com/desiitaly)