Should you buy or sell first?

By
Real Estate Sales Representative with for real estate results in the Tri-Cities.

Should you buy or sell first?

Some of the many reasons for wanting to move include: downsizing; family growing; and, relocating. 

The key to your decision on whether you should sell or buy first is planning ahead and we’ll help you explore your options.

What are your options?

For those that don’t have the financial ability to temporarily carry two properties, the options will be limited.

Option #1            Buy first with interim or bridge financing

Getting into an accepted offer on a new home without a subject-to-sale clause can be very costly and is not recommended unless you have made the necessary financing arrangements for the interim.

Arranging temporary funds will allow a seller with an unsold home to proceed with a purchase. This means that they will have the flexibility to move over the period of time between the possession dates of both properties, which can also be used for renovations.

The most important consideration here is that the seller must have a home that is marketable and being reasonably marketed, otherwise carrying two properties could start to get very expensive, especially if the market declines.

Occasionally a short possession date for a new home can be negotiated on behalf of a seller to reduce or eliminate the need for temporary financing.

Option #2            Sell first

Obviously the safest choice but it can also be the most rigorous. Inevitably it means an interim accommodation will be required, and perhaps two moves. This is often the case when someone is relocating and staying in temporary accommodation with their personal belongings in storage.

Focusing on selling your existing property first is often the best strategy in order to maximize your return. With cash in hand it also qualifies you in the eyes of a seller as a serious buyer, and could, depending on timing and local market conditions, strengthen your negotiating position.

If a buyer really wants your property you might even get away with a provisional rental agreement, or a contingency clause allowing you time to buy your next home, although this doesn’t happen very often.

Option #3            Subject to sale clause

In some markets choosing to write an offer with a subject to sale clause will work, but from experience in the Metro Vancouver area, it seems sellers are less open to accommodate this option.

It also requires a solid offer and probably very close to the asking price, which can limit your ability to negotiate.

Trying to match the dates exactly to accommodate both parties can also be challenging.

This balancing act is not for the faint of heart, and one of the many reasons why you should allow a REALTOR® to share some of his or her expertise.

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Tags:
relocating
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buy first
sell first
bridge financing
buy or sell first
subjecttosale
temporary accommodation
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Rainer
34,376
Jaime Herrera
LION - El Paso, TX

I would definitely sell first, although a good friend advised me long ago NEVER to sell real estate I owned, no matter what.

Aug 07, 2011 07:08 AM #1
Anonymous
Anonymous

Sell first! many movers will do a partial store and move essential items if someone has to do a double move.

Aug 07, 2011 07:13 AM #2
Rainmaker
572,750
Fred Hernden, CMI
Superior Home Inspections - Greater Albuquerque Area - Albuquerque, NM
Albuquerque area Master Inspector

Lot's of great information and advice.... good posting!!

Aug 07, 2011 07:19 AM #3
Rainmaker
179,568
John Grasty
for real estate results in the Tri-Cities. - Port Moody, BC
Your Tri-cities REALTOR, neighbour and volunteer.

Thanks for stopping by and sharing comments :)

Aug 07, 2011 07:22 AM #4
Rainmaker
449,271
Malcolm Johnston
Century 21 Lanthorn Real Estate LTD., Trenton, Ontario - Trenton, ON
Trenton Real Estate

John, I have seen too many deals fall through because the buyer couldn't sell their own home in time or their offer got bumped by a firm deal. It can be heartbreaking. I would always recommend selling first.

Aug 07, 2011 07:28 AM #5
Rainmaker
67,079
Janet Murray
Preferred Properties Realty - Weymouth, MA
Realtor Weymouth MA & South Shore Home Sales
This has always been a great stressor to those who are selling and buying, what to do first! It is very risky to go the bridge loan route and I feel that the best way to proceed is to sell what you have first and have a plan in place for any in-between time.
Aug 07, 2011 07:29 AM #6
Rainer
85,066
Christine Koch
eXp Realty - San Antonio, TX
Realtor - eXp Realty San Antonio TX

It is a difficult situation however you look at it.  Each client needs to determine what will be best for them.

Aug 07, 2011 07:36 AM #7
Rainmaker
179,568
John Grasty
for real estate results in the Tri-Cities. - Port Moody, BC
Your Tri-cities REALTOR, neighbour and volunteer.

Sage advice from all, and why consumers, "...should allow a REALTOR® to share some of his or her expertise."

Aug 07, 2011 07:55 AM #8
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Rainmaker
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John Grasty

Your Tri-cities REALTOR, neighbour and volunteer.
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