A difficult and complex question! The short answer is that there is no correct universal answer- only the one that's best for you. Being a first-time homebuyer has its own anxieties, but when you already own a home and are thinking about upgrading, downsizing or relocating the challenges grow exponentially.
In our marketplace it is extremely challenging to find homeowners who would consider an offer to purchase from a buyer that includes a contingency of subject-to-selling the buyers existing home. Therefore, if you currently own a home and are considering selling it and buying a new one, you'll need to decide which process (buy/sell) to undertake first. Both choices come with benefits and risks.
The good news is that we successfully help clients navigate through this process every day.
Buy First/Sell Second
- When you buy first, you know you have a home to move to - " a roof over your head" - when your current home sells.
- When you buy first, there's no pressure to compromise on the type of home or the price negotiations because you still have your current home.
- When you buy first, one of our goals as your agent would be to negotiate (with your instruction) as lengthy a closing date as possible in order to have time to sell our existing home.
- When you buy first, most sellers and sellers' agents will demand documentation from you via your chosen lender that states that you've been pre-approved for a loan to buy your new home, whether or not your current home is sold by the agreed-upon purchase date of your new home. Ah, there's the rub- or better said, the risk. If your existing property isn't sold in time you'll be potentially carrying three mortgages- the first mortgage on your existing home, the first mortgage on your new home and the bridge loan on the equity you have in your existing home.
In Summary: Although this option could be financially risky, many of our clients choose this route to eliminate the possibility of selling their existing home and not having a place to go.
Sell First/Buy Second
- Before marketing your property, we would help you analyze the value of your existing home and calculate your net proceeds of the sale of that home, in order to help you establish a budget for your new home purchase.
- Before marketing your property, we would help you assess the viability of buying a new home in the price range that you have chosen by showing you properties in this price range. You may not find the perfect home time during this time; rather, the goal would be to give you a comfort level that you will find one in that price range once your existing home is under agreement.
- By selling first you can demand and negotiate the best market price for your existing home without having the pressure to compromise because of a scheduled closing date on a new purchase.
- Once your existing property is under agreement we'll help you locate and negotiate for your new home. However, there's no guarantee, even if you find the right home, that you will be able to coordinate the two closings. So there is the risk in this method- you have agreed to sell your home and vacate on a particular date and you may not be able to negotiate the same date on your new purchase. So, temporary housing and two moves may be necessary.
In Summary: Although this option would require temporary housing and two moves many of our clients choose this route to eliminate the possibility of a bridge loan.