The question of whether one should first buy or sell is analogous to the question of which of two vials of poison one should consume. Okay, maybe not quite so dramatic… However, I would venture to guess that almost 95% of all of our clients come up with the same response. Buy first, sell later. Let me walk you through it…
On the one hand, if you buy first, there is the possibility that you may end up owning two properties for an extended period of time. And by extension, you may be required to pay two mortgages. Not ideal. The good news is that in the 28 years that I’ve been selling real estate, I can’t actually recollect any instance in which I had a client that had to make mortgage payments on two properties for more than, perhaps, a month. The reality is, by the grace of some god, our clients are able to purchase their new home and transfer title on their existing residence on the same day. In order to accomplish this, there are some strategies that one should consider.
- The most obvious strategy is to be sure that, while looking for your new abode, you’re simultaneously working on preparing your existing residence for market. Once you’ve consummated a purchase contract for the new property, you want to be sure that your existing residence is prepared and ready to go on the market the next morning. In doing so, you’re potentially reducing any lag time between closings.
- The other strategy that you may want to consider employing is one in which you ask the sellers of the property that you’re about to purchase to close two and a half to three months down the road. If it takes two to four weeks for you to sell your existing residence, then you should be able to align both closings on the same day.
You may be thinking, why risk it and purchase a property before selling? Well, the obvious difficulty that comes about as a result of selling first is that, unfortunately, you may be metaphorically shooting yourself in the foot. (Dramatic, again… I know) In other words, selling your home first greatly reduces the amount of time that you might have to find your next dream home – a property that you may end up living in for the next 10 or 20 years. However, if the thought of moving into an apartment/temporary housing and moving all of your belongings twice doesn’t bother you, then perhaps this is the strategy that you should employ. The benefit of selling first is that it helps you to understand exactly how much cash you will have to purchase your next residence. And, if you don’t qualify for a bridge loan, it allows you the opportunity to write a non-contingent offer when you find the property that you’re hoping to call your next home.
Do you have any questions or concerns about the process of buying or selling real estate that you’ve always wanted to have answered? If so, let us know!