If you are like most people buying and selling real estate does not happen very often. So when the decision is made to move confusion may arise as to whether you should sell first or buy first. There is no set rule; your final decision should be tailored to the best fit for you. The following information is designed to assist you in making the right choice.
There are two methods you can entertain when you buy a home without selling you home first.
1. I Make an Outright Purchase
Since you may end up owning 2 homes if your current home has not sold before you take possession of your new home try to extend the possession on your new home. If you will not be paying cash for your new home make the offer conditional to obtaining interim financing.
2. I Buy Subject to the Sale of my home
When you submit an offer to purchase on a real estate property subject to your property selling you will not be obligated to buy it unless you sell your home. If the seller accepts your offer the home will remain on the market with an escape clause. An escape clause means if another offer comes in on the property you will have 24 – 96 hours (depending on what is agreed upon) to purchase the home or forfeit the sale. It is advisable to see your lender to arrange interim financing if this situation arises. The seller will usually allow you 30-60 days to sell your home in this circumstance.
When you sell first you will not be left in a situation where you own 2 homes. If possible get a possession date somewhere between 90- 120 days to allow you time to find a new home.
Which Real Estate Move benefits me the most?
If you sell first and can not find a home you like, you may have to rent or worse yet settle for a home that is not suitable for your needs. If you buy a home before your home sells you may end up owning 2 properties which could cost you thousands of dollars in carrying costs. If you make an offer on a home subject to your home selling you could lose the home to another buyer if the escape clause is invoked.
From an economic view point the real estate move that will benefit you the most is to sell first. When your home is sold, you know exactly how much money you have to work with when you make an offer on another home.
Your realtor can assist you in this process, however the final decision is yours so weigh all the options and then decide what is right for you.