"Should I buy first, or sell first? I don't know what to do."
It's a commonly asked question, without a definitive answer.
Many people find themselves in this real estate predicament, reminiscent of the "chicken or the egg" quandary. Unfortunately, there's no across-the-board answer that works for everyone. Circumstances, finances, and many other variables can make a difference in determining which scenario will be best for you.
Buying First -- If you buy a new home first, you may find yourself in position of owning two homes which may be enviable or an issue. If you can afford two homes, it gives you the luxury of moving when you want. We have helped many clients buy first, move some stuff out of the existing house in order to stage it properly and then complete the move once the house sells. It also takes the pressure off finding the perfect house during the short window of time that exists once a home is put up for sale. Of course, buy first clients need to qualify for the new purchase while owning the existing home. There are some creative contract timing and financing strategies that can be used to help those who can afford to carry two houses for a period of time.
Selling First -- If you sell your home first, it opens up a whole new realm of possibilities and possible issues. The best of which is your home has sold and you know how much money you're getting form the sale and when you need to move. Issues arise when sellers don't have or can't find the next home to buy. You could end up selling your current home before finding a new one, which could mean you are stuck having to put most of your possessions into storage and finding temporary living arrangements.
Either situation presents its own risks and uncertainties and it's best to meet with a professional to review your options.
So which do I recommend? Generally speaking, in areas of tight inventory, the preferred method is to buy first and then when under contract on the new purchase, turn around and sell your home. If you don't qualify to buy the next home without selling, we have some creative financing and timing tools at our disposal.
What about contingent offers? While your current home is on the market, you can write an offer for your new home and make it contingent upon selling your existing home. However, whether or not it works for you remains up to the seller of the new home. You should keep in mind that you will pay a premium with a contingency offer--that is, if the seller even gives it a second thought. Many sellers may be reluctant to accept a contingency offer if they think there is a good chance they will get other offers. In these cases, you may be tempted to lower the price on your current home in order to help it sell faster so that you can close on it and move forward with buying the new home. Therefore, we always say, be cautious. You can take the comfort in knowing that you can write a contingent offer for a new home anytime you like while your home is on the market, but don't let your eagerness to nab a new home let you lose sight of the true value of your current home.
Everything is circumstantial -- With interest rates still relatively low, the D.C. housing market is moving very quickly these days. That means that home buyers are more focused on buying than selling. Motivated buyers are being recommended to obtain a mortgage commitment that is not contingent upon selling their current home, in order to dive in to this fast-paced buyer's market. Home buyers are realizing that even in a strong market, the selling end of a transaction can drag on, potentially leaving them in the dust when it comes to landing a good deal on a new home. Either way, the choice of buying or selling first is entirely, 100-percent circumstantial, and financially dependent on each individual buyer. Circumstances may put you in a position where you have to sell first in order to secure the money to buy. Or, they may have you in a position where you have to buy quickly because of a job relocation. In today's market, there are advantages and disadvantages to each scenario--buying first and plunging into the hot buyer's market, or selling first and having the relief of knowing that you won't be trapped paying two mortgages at once.
We are happy to consult with you and help you make the decision given our expertise in the local market, so please contact us if we might be able to help!