Should You Buy First and Sell Second?
Is It Better to Buy or Sell Your Home First?
Homeowners can sell their properties with contingencies built into their contracts, stating that they must be able to buy a replacement house or the deal is off the table. They don't have to sell if they can't find a new home, but some people just aren't comfortable with selling before buying regardless, even with that safety net.
Looking for a new property before listing an existing home for sale takes some of the anxiety out of the situation. Of course, these homeowners are then under the gun to sell their existing houses pronto and try to close on both properties concurrently after finding a home to buy. It can be tricky, but it's not impossible.
You might not be put off by that pressure under a few circumstances that can make buying first a good—or at least reasonable—decision.
It's a Seller's Market
Homes generally sell within days of hitting the market when inventory is reduced because there are many buyers, so there's less risk involved with buying first and selling second.
Few sellers will accept a contingent offer in this situation, however, stating that you have to be able to sell your existing property first before you close on the new property. You could be stuck owning two residences until your home sells.
You'll probably pay top dollar for your new home in a seller's market, especially if you end up bidding in a multiple offer situation.
The Deal Is Too Good to Wait
Sometimes, a home will come on the market at a price that's just too good to pass up. Perhaps the sellers are getting divorced or they need money to pay medical bills or to meet another emergency. In any event, they're extremely motivated to sell.
You might want to be the first offer on the table before word spreads across town.
It makes sense to buy before you sell in this case because the money you'll save walking into the deal is worth making double payments until your home sells.
It's Your Dream Home
This one is an emotional decision. Many buyers start their house hunts logically and analytically, then they end up letting their hearts rule.
Those who fixate on owning a certain type of home might as well buy it when they find it. Ideally, however, money is no object for them.
You Don't Want to Move Twice
Imagine this scenario: You close on the sale of your home on May 15, then you start looking for a new property. You find it, and your closing date to purchase that property is August 15.
You're faced with renting for a couple of months, or moving in with friends or relatives for a short while. Either way, you'll move once to your temporary quarters, and again into your new home. You'll have to pay movers twice, and you'll probably have to pay for storage in the interim.
All this might not work out to a great deal of money spent, but you probably have better uses for that cash. And you might be tempted so settle for a somewhat less-than-perfect new home just to put the transition behind you and spend a few less weeks in your in-laws' guest room.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.