Sell First or Buy First
by Max Malychev
There is a standard rule throughout the real estate industry that says you should sell first, and for good reason. Here’s a scenario: You find a home that you would like to purchase, and you write the contract subject to selling your home in the next 30 days. The seller doesn’t like accepting this special clause in the offer but agrees to it if you pay $5,000 more. For the peace of mind of not being stuck with two homes, you agree. Now you are selling; however, you are two weeks into the listing and starting to get nervous. Finally, a low-ball offer comes in and you negotiate the price, but settle for less than you wanted because you really want the other house, and have to sell your current home to pay for it (you are very motivated). On both sides of the transaction, you may have lost a total of $15,000 because of your motivation ($5,000 on the buying end and $10,000 on the selling end).
If you sell your home first, you will always be in a power position, as you don’t have to sell (less motivated). This way you can wait as long as you need for an offer to come in that is acceptable to you. In addition, when you decide to buy, you can write an offer with fewer conditions, and have the ability to match possession dates for your convenience.
Money Making Tip: In normal market places, selling first will give you the negotiating edge to save thousands.
If you are looking for an uncommon home or if the market is very low on listings, you may want to consider buying first. Give yourself enough time on the possession date to sell your home without too much pressure. In addition, speak with your bank about bridge-financing, in case you need to temporarily carry two mortgages.
