Should I Sell My Home Before Finding a New Home?
There are exceptions to every point but the answer is usually yes.
Imagine that you must sell your home. You spend the time to get it ready to sell and then your agent puts it on the market. There are showings but no offers yet. You want to move and sometimes you need to move. Does this sound stressful? Selling a home is one of the most stressful things you’ll ever do along with your wedding day and having a baby.
Now imagine that you have a time limit to sell your home. You must start a new job in a certain amount of time.
On top of that, imagine now that you now have a time limit but you’ve imposed one on yourself! Why and how would you do that?
By finding a home you want to buy before you have sold your home or put your home on the market, YOU ARE SETTING A TIME LIMIT FOR YOURSELF! Your seller knows that he must sell his home before he can buy his new home but he doesn’t know anything about your house or when it will sell. If you were him (and you will be when you're selling), given the choice, would you prefer a buyer who needs to sell a home to buy your home or a buyer who doesn’t have a house to sell? If the seller is willing to entertain the offer with a contingency to sell a home*, the seller is less apt to negotiate on other terms as they feel they’re already negotiating by signing a contract that is contingent on selling another home**. You’ve already lost some of your negotiation “power”.
Until your home is under contract, they don’t know if and when they can move. Because of this, seller’s agents know to write a “kick out” clause into the contract. What this means is that, if another buyer who does not have a contingency to sell a home wants to buy the home, you will be given 48 (example) hours to take the contingency off or the other buyer will get the home. Removing the contingency can mean selling the house or merely taking off the contingency, which can be dangerous for you if you get stuck with two mortgages.
If your home doesn’t sell in the time frame that it takes to close on the home you’d like to buy, you may lose that home. This becomes more stressful for you and for the seller than it would be had you waited until you had a contract on your home before you looked for a new home.
Since you have the choice, why put yourself through the additional stress? Buying and selling a home is stressful enough!
Overall, the best choice is to have a contract on the home you're selling before you write an offer on one you want. You should wait to look at homes because if you see one you like you’ve started the process. By the time you’re ready to look for a home, there will be different homes on the market.Also, by selling first, you know how much money you'll have to work with.
You ask, “What if I don’t find the home I want? Am I stuck selling my house?”
The solution: When we find a buyer for your home, we will write a contingency into the contract. It will state that the contract is contingent upon the seller finding suitable housing. It is easier to find a home with the many options out there than it is to sell one. It’s usually easy to get a buyer to agree to this.
*To qualify to purchase a home, you must sell your home. Without a contingency in the contract, you may not qualify. If you do, you must stick to the terms of the contract and may be stuck with two house notes.
**An exception is that some of the new homebuilders I work with are willing to work with a contingency to sell, but even these builders have some type of time limit.