Buying Then Selling or Selling Then Buying – A Chicken and Egg Dilemma
Every week we receive at least 5 or 6 calls from people who have been house hunting on the Internet and have a list of properties they want to see in person. Their enthusiasm is so permeating that we wish it were something that could be bottled and sold like fine perfume. Then as conscientious realtors, we qualify the request with the following questions:
1. Have you spoken to a mortgage person? Answer “no.”
2. Do have something to sell? Answer “yes.”
3. Is the purchase of the home you are considering contingent on the sale of your home? Answer “yes.”
4. Is your home currently on the market? Answer “no.”
Very often we hear,” We want to find a house first, because what if we sell our house and can’t find something?”
There is a proper sequence in which to accomplish all of your ultimate goals with you coming away less stressed and most satisfied.
If you find your "perfect home" before selling your current home, unless you can purchase it cash, you are considered a contingent buyer. In other words you must sell your home and use the proceeds from that sale to purchase your new home. That leaves you as a buyer in a weakened position when trying to put an offer on that dream home. A home seller generally will be hesitant to accept contingent offers. If they do accept your offer the home is still being shown for non-contingent buyers. What happens when a non-contingent buyer makes an offer on the house you fell in love with? The seller will come back to you and say you have 48 hours to lift the contingency (come up with a way to buy the house now), or they will sell it to the other offer. This is a heartbreaking experience to say the least.
So what is the right thing to do? Whenever major changes are being considered, whether personal or business, a well conceived plan should be in place to avoid obstacles that could hinder a successful outcome. In order to avoid bitter disappointment and to put you in the strongest financial and bargaining position, here is the order in which you should approach one of the most important, life changing moves, you will make:
Step 1: If you are considering a move, drive around to different areas/developments and observe the neighborhoods. Look around not just at the houses, but at the people living there.
- Are there children?
- Are the properties well maintained? (Speaks to pride of the neighborhood)
- How is the location in terms of resale? (Near busy road or near commercial properties)
Will this area be suitable for your commute? Use a Commuting Calculator to help you determine your costs.
Always remember that this is not just a home but an investment of your hard earned money and you want to put it in a place that will yield the best return for the future when you are ready to sell.
Step 2: Go back and do your homework. Search on the Internet about prices of homes in your desired areas. Our website gives you all the latest data about the homes and the area.
Step 3: Speak to a mortgage representative (in fact speak to a couple) to find out what price home you could qualify for and what kinds of mortgage programs are available to you. You will have a much better idea before you truly start falling in love with things that may be out of your financial reach. Or you may even qualify for more than you think. We have all kinds of mortgage contacts for you to contact.
Step 4: If you need to sell your home in order to buy something else, you must get your home on the market first.
-Get a CMA (Comparative Market Analysis)
-Properly prepare your house for sale. A staging consultation can be a very helpful tool if you’re not sure where to start.
-Listen very carefully to the suggestions your realtor makes about price. You need to price your home at a point that will draw buyers.
Pricing at or even just below market value will bring more prospects and therefore can yield better results than overpricing and having it sit for a long time on the market.
-Keep your home in tip top shape ready and available for showing EVERY DAY.
Step 5: While your home is being marketed now you can focus more on your search. Make a wish list of properties and have a realtor show them to you.
you can look with an intention to make an offer now or wait until your current home is actually under contract. The advantage to waiting is that you will be in a much stronger bargaining position when you make an offer. You demonstrate to a seller that you are ready to go now vs. them having to wait for your house to be sold.
If you do things well and in the proper order they can all come together very quickly and easily as opposed to a protracted situation that tends to fray everyone’s nerves leading to a less than perfect outcome. The steps are the no different when it comes to buying and selling, but it is the order that is key. It also is more likely to insure you’re getting your “dream home” than having to settle for less.
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