buy then sell, or sell then buy?

thisishishouseSeptember 16, 2009

When moving from one home to another, what's the general order of events? Do you find the new house, then list your current home, or vice versa?

We were told by a broker that we need to list our home and obtain a buyer before finding our next home and putting an offer on it. The broker said that if we put an offer on a home with a contingency to sell ours, that we'd lose all bargaining power.

We're content in our current home, and had only started looking to see if that next perfect house is out there. We're afraid if we list our home first, then the clock would be ticking to find another home, and we may end up being forced to settle for second best.

thoughts, opinions, and experiences?

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cordovamom

In this market you should definitely sell your home before you buy. Your realtor is right about the contingency clause, in addition many sellers won't accept a contingency clause. You don't have to settle for second best, you can move into a short term rental til you find your dream home if it's an issue.

I will tell you a tactic that my mom used, although I'm not so sure in this market a buyer will go for it. When she was selling the big family home to downsize as a senior citizen, she was sooooo afraid she wouldn't find the right house for herself when her home sold the first week on the market. So the clause she had put in the contract was that the sale was contingent upon her finding suitable replacement housing within 10 days. It basically put the whole contract on hold for 10 days. She was able to find suitable housing within a few days so then the contingency was removed. Had she not been able to find housing then the sale would have been done with. As I said in a buyer's market, I'm not sure this would work unless your home was unique and a real deal as well.

    Bookmark   September 16, 2009 at 7:32AM
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terriks

If you can afford to carry 2 mortgages then go ahead and buy first. Otherwise it's best to sell first.

    Bookmark   September 16, 2009 at 12:07PM
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adellabedella_usa

I agree, sell before you buy.

We live where the cost of living is much lower than most of the rest of the country. An under $200K (beginner-second time owners) house here may be your $300-600K house. In our market, the houses under $200K are selling, but the higher priced ones are sitting. It's not as strong of a market as it was previously. The selling price has only appreciated about 3% over three years ago. In my neighborhood, the houses that are priced right, are clean, and have a few upgrades are basically selling in 30 days. The ones that are overpriced or have incurable defects such as location that need a much lower price to sell are not selling.

    Bookmark   September 16, 2009 at 12:14PM
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landmarker

Here is what I recommend...

1. Go out and look at houses in your area to see what the prices / availablity of homes you would want to buy is like.
2. Have a realtor come in and give you market analysis of your home along with suggestions of what you should do to market it (i.e. rip down all your wallpaper).
3. Get the home market ready by listening to what your realtor tells you about fixing up.
4. List your home and keep paying attention to listings of homes you would like.
5. Look at houses you are interested in.
6. You could offer contingent on sale but that is basically a waste of everyone's time if you are not under contract to sell. Therefore you basic option is to hope houses stay available until you sell, which is very common in this market.
7. If you get an offer, you should only accept if you are relatively confident the house you want is avialable.
8. Simultaneously negotiate on your current home and home you want to buy (orally).
9. Only accept and sign when you are happy with terms on both sides.

  1. If you have a buyer and are under contract, I would ask to make the purchase contignent at this time, in case your buyer's financeing does not come through. This contingency is more acceptable to sellers in a buyer's market, due to the fact you have a contract in hand.
    That is how I did things, inclding the contingency. I did wind up between homes for 2 weeks though, due to the fact that since I had a contingency, my seller did not want to pack their home until they knew for sure I closed.
    Bookmark   September 16, 2009 at 12:44PM
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thisishishouse

Thanks everyone for all the responses so far.

It's that "between homes" situation that landmarker mentions, the short term rental, that we can't bear to imagine. We've got a trio of young'uns and a horse-sized dog. Putting our belongings in storage, then moving our herd twice just doesn't sound appealing. Ugh.

Is the process any less complicated with new construction, or a house that's been vacated (like retirees, estate sale, etc)?

    Bookmark   September 16, 2009 at 1:04PM
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cordovamom

The majority of homes we've purchased (all but one) were vacant and that did insure that we'd get the home at closing. But that was the only advantage. You still have to find a home that is suitable once you've sold your home unless you want to take the risk of double payments.

    Bookmark   September 16, 2009 at 1:47PM
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chisue

You sound like us -- a realtor's nightmare. You don't have to move; don't even sound like you want to.

BTW there is no 'perfect' home. We ended up building ours -- and it's not perfect either! LOL

All good advice above.

    Bookmark   September 16, 2009 at 5:39PM
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thisishishouse

chisue: That's a fair and accurate assessment. We're only looking because we recognize the values that are in the market right now. We have no compelling reasons forcing us to move. We do have a list of things we don't like about our current house, but it's a short list and we've made things work for this long. To undertake the huge task of packing up and relocating our family would require the "perfect house." That one you walk in and immediately get 'the vibe' that it feels right. So yep, a nightmare.

Given our particular tastes, we're feeling that we may be better off just building too. But that's a whole other list of questions to untangle. Sigh.

    Bookmark   September 16, 2009 at 10:13PM
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landmarker

I will offer this advice for what it's worth. Selling, Buying and Moving is extremely stressful and time consuming and very expensive. The worries you have above are all part of it... but there are so many "in the moment" stresses you experience through the entire process. The expenses you incur are RE commisions, closing costs, legal fees, and moving costs. Many people overlook transaction costs and feel that since they are investing in real estate and getting loans that these are not real costs. But if you are spending $x0,000 in transaction costs this is a deduction in your net worth and should not be ignored.

Building a home is more stressful than buying one... and also has a great chance that you wind up in a rental in between. This is becuase builders and contractors fail to meet their schedules and commitments. My feeling about building a new home is that by definition you are going to get an inferior location and are taking a large finanial risk if you are buying in an unfinshed neighborhood.

Due to all this money and stress you have to be highly motiviated to move. Is your motivation an improved "lifestyle"? If your motivation is financial then moving is not good for finances and if it is "a nicer house", then you should consider this carefully whether your family / kids care that much. Location, neigborhood, closesness to work / family are the better reasons that will motiviate you. Good luck

    Bookmark   September 17, 2009 at 12:34PM
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kudzu9

We bought a home 5 years ago that we fell in love with and still love. The house we were living in was paid for, but not even on the market when we decided to buy. We knew the risks, but went ahead anyway. The existing and the new houses were of about the same value, so we knew we would be ok in the long run. However, it took us 5 months to sell our existing home, and all the equity was tied up in it until it sold, so we had to take out a huge interest-only bridge loan. That meant about $2500 a month down the drain until we could free the equity. I would still do it again because of the special nature of this house, but it was a stressful time until we got an offer, and it puts you in a bad bargaining place, because you get to the point of just wanting to unload the house. So, if you do what we did, look carefully at your finances and do a projection to make sure you can handle a worst case scenario.

    Bookmark   September 18, 2009 at 1:24PM
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booboo60

I "ditto" landmarker!!! STRESSFUL!!!

    Bookmark   September 19, 2009 at 11:29PM
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