The answer to this question depends on your tolerance for risk and inconvenience.
I have a number of clients facing a peculiar, but increasingly common dilemma, whether to sell or buy first. If you sell your house first you run the risk of selling it before you locate a new house to move into. If you buy first, you have to come up with a down payment, qualify for financing, and nervously wait for your house to sell.
Selling first has its advantages. When you sell your home first, you'll know exactly how much you can afford to pay for your new home. You’ll have the cash available and “cash is king” in this market. It’s important to get pre-approved for the financing so you’ll know exactly what price range to shop within. During negotiations, you'll be in much stronger position to make a non-contingent offer, which is much more likely to be accepted by the seller than an offer that has a contingency attached to it.
If you sell your house first, try to negotiate a longer escrow and an option to lease back the property from the buyer of your home for 30-60 days. This way you might not have to face a double move if you are fortunate enough to find a replacement property before you have to turn over the keys to your home. Explore the possibility of short term rentals and know that you might have to put your furniture in storage.
When buying first, it might be necessary to place a contingency clause in the offer. This clause states that the purchase is conditional upon the sale of your current property, usually within a specified time. A contingent offer has some disadvantages. You run the risk of being rejected by the seller for a more favorable offer without a contingency. Sellers are less likely to accept a contingent offer when they have other offers that don’t carry this contingency clause.
Some of my clients have made the decision to sell now because they feel that prices may decline further. Even if they are not ready to buy another home just yet, some are going into interim rentals and are waiting because they think there will be lower prices next year.
Whether you decide to sell first or buy first seek the advice of a professional real estate agent who can guide you through this tricky process.
The Real State of Real Estate
By Carol Wolfe