Common wisdom suggests that we are in a buyers' market where bargains are plentiful. With interest rates at five-year lows and rising inventories in most areas, the first step is clear if you are just looking to purchase. If, however, you are a buyer who also has a home to sell, what should you do first? Should you buy first and risk the burden of multiple mortgages if your current home is not sold in a timely manner, or should you sell first and gamble that you will be able to find the right house within the closing timeframe?
In more robust markets, most of my clients choose to sell first, often waiting until the home inspection of their purchase before marketing their own homes. When the average time on market for properly priced homes was measured in days, it was not difficult to synchronize the buy/sell timing in a way that minimized transaction costs.
In today's challenging market, where the local average time on market is nearing three months for well-priced and updated properties, and where sellers are loathe to take a home sale contingency in the sales contract, it has become unrealistic to attempt the buy-first strategy.
I have recommended that my would-be buyer clients undertake a more conservative approach to minimize their exposure to unnecessary outlays by putting their current homes on the market first. This also allows them to know exactly how much money they will have to purchase their next home.
One final note: to reduce the stress of trying to synchronize the sale and purchase, you may want to either negotiate a longer closing time with your buyer to allow you some extra time in finding your next home, or you may want to consider short-term housing to bridge any gaps, whether through a rental or by staying with relatives or friends.