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Value
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Should You Sell or Buy First?
This is your dilemma:
Should you wait for the right home to come on the
market before putting your current home up for sale
or should you sell first and then go out and find
what you want?
While there is no simple answer to this question,
you will probably come to a definite decision based
on your personal comfort levels with regard to the
following...
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Pros:
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Cons: |
- You know exactly how much money you
have from the sale of your first home
and can comfortably choose your next
home's price range and negotiate
accordingly.
- With cash in hand you can
immediately make firm offers on any
property that meets your needs. If a
property pops up that is perfect or
extremely well priced you can be the
first in the door with an offer.
- You have more negotiating power.
When Sellers turn down or counter an
offer that is conditional upon the sale
of a home, they usually believe that the
Buyer will come back with a more serious
offer if and when the Buyers' home has
finally sold. Sellers give much more
consideration to unconditional offers
since they usually realize the Buyer
does have other options and may move on
and pursue a different property if their
final offer is rejected.
- If more than one property interests
you, you can shop around, negotiate, and
finally settle on the best deal.
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- If the right home is not currently
on the market when you finally sell, and
nothing comes up before your closing
date, you may have to find alternative
accommodation until something
appropriate comes along.
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Questions you should ask
yourself |
- Do you have reasonable options available if
your closing dates do not line up and you cannot
move into your new home the same day you move
out of your current home?
- How would you and your family react to the
stress of having to rent for an unknown period
of time?
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Pros: |
Cons: |
- If you are only interested in moving
if a very specific property comes up,
buying first ensures you do not miss out
on the perfect opportunity.
- If a unique or underpriced property
comes on the market and you do not think
it will last long, snapping up the deal
ensures someone else does not buy it out
from under you.
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- If your current home does not sell
quickly enough you may end up having to
finance both homes and carry the extra
debt until you do sell.
- You do not know what the final
selling price of your current home will
be. If your budget is tight, this could
affect your financial decisions. While
you can get appraisals and market
evaluations of your current home's
value, nothing is for sure until you
actually get an offer.
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Questions you should ask
yourself |
- How would you react to the stress of owning
two homes at once?
- Would you have the financial reserves to do
this?
- How would you feel if you were eventually
forced to sell your current home at a "fire
sale" price?
A third option involves making your offer to
purchase conditional upon your being able to sell
your current home within a specified time period.
Conditional offers usually include a clause that
allows the Seller to continue to market his or her
property while you try to sell your home. If the
Seller receives another bona fide offer, they can
accept it and ask you either to remove your
condition and firm up or to step aside. While
conditional offers do not provide all of the
advantages of the first two options, they do offer a
reasonable compromise for those uncomfortable with
the drawbacks associated with either selling or
buying first.
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Pros: |
Cons: |
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You have less
negotiating power. Sellers sometimes
turn down or counter an offer that is
conditional upon the sale of a home.
There is a general impression that
Sellers give less consideration to
conditional offers than they do to firm
ones. Some Sellers feel that the Buyer
will come back with a more serious offer
if and when their current home has
finally sold. You may end up having to
pay a bit more for the house in order to
get your conditional offer accepted and
be first in line.
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Another purchaser may
make an offer and bump your offer before
you have sold your current home, putting
you back at square one.
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You cannot withdraw your
conditional offer until the time set out
in the condition has passed. This could
be frustrating if a better deal comes
along and you wish to pursue it.
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