Jun 19, 2017
By Stafford Manion
This decision is often influenced by:
1. The Buyer’s Market.
If you are dealing with a buyer’s market, it might take a while to sell your home due to the large amount of inventory, which could result in a lower sale price than what you expected. This might cause you to sell before buying! Not to mention, the buyer will most likely want to close in 45-60 days. It will be 15-21 days before all contingencies will be removed on the sale of your home, leaving you very little time to find your new home. Renting/double move is an option, but not ideal. Because of these factors, you might want to sell your home before buying. This option offers you comfort in knowing exactly the sale price of your home, and how much you will have to spend on your new house.
The Seller’s Market.
If you are dealing with a seller’s market, it may take a while to find the house you want in such a competitive market, and you most likely will have to be aggressive with your offer. You then may be asked to close in the 45-60-day range, leaving you little time to sell your home. In this market, if your home is priced appropriately, it will most likely sell quicker. Matching the closing days of the home you’re selling, and the house you’re buying can get a bit dicey. This option may have you buying your new house without knowing exactly how much money you’ll receive out of your existing home sale.
2. Financial Capabilities of Purchaser
If a purchaser has the financial capability to own two homes (bridge loan) for a period of time, this allows them the opportunity to purchase prior to selling. The client, however, should get an honest assessment of what their existing home could sell for prior to purchasing. The flaw in this approach is the seller realizing substantially less proceeds from their existing house to put down on the new house.
3. Expectations of the Client
Prior to making the decision of which direction a client should go, an assessment should be made on both sides of the transaction. This involves getting an honest assessment of the value of their existing home, as well as investigating homes on the market available in their desired price range. If the client expects their house selling above market value or if they are not satisfied with existing homes on the market in their price range, expectations will need to discussed between the client and the agent.
Often a client's purchase is based on the difference between what they will net from the sale of their home, and what they will pay for their new home. If the sales price of their existing home goes down (net! minus commissions) and the price of their new home goes up, the delta between the two can change dramatically. An honest, seasoned agent can help with this process and decision.