Since most sellers are also buyers, there arises the question of how to manage the sell/buy process smoothly in an uncertain market. Should you list and sell first or try to buy first then sell? As with most aspects of real estate, there are pros and cons to every scenario (and varied risk factors).
1. Sell before you buy: One of the issues in this market with the uncertainty of home sales is that sellers do not want to accept a contingent offer no matter how desperate they get. So trying to shop for a new home with the plan of making a contingent offer and then listing your home for sale may seem like the safest bet, but may not be viable.
You can try to time the market so that you get your existing home under contract with a lease-back period of 30-60 days, then shop for your next home, then make a non-contingent offer after closing. This assumes the buyer on your existing home is willing and able to offer such a leaseback, and that you find your next home within the exact window available for you. If not, you may find yourself having to move into temporary housing while you continue to look for your home to purchase.
It also assumes your home can be shown to the public while you live in it; is your home “show ready?” Do you have excess clutter, kids or pets? All of this can complicate showings and reduce sale price/interest if your home does not show well occupied.
If you can manage the inconvenience of all of this, it is the lowest risk option.
2. Buy before you sell: There are several options for this process. If you have the cash on hand for the down payment and can qualify with your income, you may be able to simply buy your next property, close and move, then turn around and sell your departing property. Others may need to take a HELOC (home equity line of credit) on their existing home to fund the down payment on the next property. And for those who can’t qualify for either of these scenarios, there are bridge loan options available that come with their own costs and risks.
In any of these scenarios, you may find yourself in a situation where you are carrying payments on 2 properties for longer than you anticipated, which can cause financial strain. Make sure you are going in to any of these situations with eyes wide open and have a realistic expectation of what your home will actually sell for. Will you panic if the home sits on the market for more than 30 days? 60 days? 90+ days? In the wild markets of 2021 and 2022, there was hardly a doubt a home would sell quickly, but in today’s market you may be surprised at what homes sit.
Bottom line: Work with your agent and listen to what they tell you about market conditions, pricing and strategy. If you want to discuss your specific buy/sell strategy, give me a call and let’s talk.