What if I Need to Sell Before I Buy Something Else?
Selling a property before purchasing another is common, especially in the current market conditions. There are three options people typically consider in this scenario. In this article, we will weigh each option’s pros and cons in the event you find yourself needing to sell before you purchase another home.
Scenario 1: Finding a New Home Before Putting Your Current Home on the Market.
This way, you can avoid the time and preparations needed to allow for showings on your home until you have secured a contract on yours. The disadvantage of this option is that the Seller for the property you are purchasing may give you a narrow window of time to sell your home. As a result, you may need to price your home more aggressively to sell it within that negotiated time frame. In this scenario, the Seller also will likely require a Kick-Out Clause which will allow them to continue to promote the sale of their home and negotiate on and accept another offer. This clause can be removed once your property goes under contract if your agent is able to advocate properly on your behalf. A strong negotiator might be able to help you avoid this clause altogether. When using the proper addendum, your requirement to deliver the earnest money deposit, the time frames for inspections and for beginning the loan application process won’t begin until your home goes under contract unless agreed otherwise.
Scenario 2: Putting Your Current Home on the Market While Searching.
The advantage of this option is that, even if you have yet to find your dream home, you can still accept an offer from a Buyer and negotiate into your acceptance the contingency of you finding a new home or a suitable living arrangement within an agreed upon number of days. However, the disadvantage of this option is that you might find a buyer who will not accept the contingency of you finding something else, and you will be faced with the decision to either let the Buyer go or accept their offer and rush to find someplace to move to. Should you overprice your home in this scenario, there is a risk of your property becoming market-worn, losing its appeal to potential buyers who will begin to question why it is not selling.
Scenario 3: Selling Your Current Home Without Having a New Home Identified.
This can be a great option if you have a place to move to after your sale. First, you will know exactly how much money you will have available for a down payment on a new home. Second, you have the luxury of taking your time to make a thoughtful decision on your purchase without feeling rushed. You might have a second home, a family member you could stay with, or move into a short-term rental while you diligently search. This option is very risky, however, if you do not have a secure place to move into after your sale.
Regardless of your choice, your trusted real estate professional can use their problem-solving skills to help make your goals a reality. For instance, it's possible to negotiate to be able to remain in your home after the closing for an agreed upon amount of time or possibly you could request to take possession of the home you are purchasing prior to closing if the Seller is able to accommodate.
Selling a home before purchasing another is common in the real estate market. Although it can be tricky, several options can make the process smoother and less stressful.
Risks are involved in these scenarios and should be carefully considered and negotiated. It's essential to consider each option carefully and work with a reputable real estate agent who can guide you through the process and negotiate the best terms and conditions for you.
