Subject to Sale
In today’s buyer’s market, we’re seeing more and more clients who want to upsize their homes but aren’t quite sure about the timing and process of selling their current homes. With that in mind, we wanted to share with you some insights and options about whether to buy or sell your home first.
Looking for a Change
Perhaps you’re looking for a new home because your family is growing. Perhaps you’re downsizing because your children have left the nest. Whatever your reason for wanting to sell and move, there are a number of things you must consider. We couldn’t possibly address them all in one long blog post but we do want to start by talking about whether to buy or sell to start the process.
Buying First
Imagine this scenario: You might be window-shopping for a new home and unexpectedly, well in advance of actually being prepared to move, see a home you absolutely fall in love with. You want to jump in and buy it before someone else can steal away your dream home.
Have you made the necessary financial arrangements? Can you afford to carry two properties, two mortgages? If you have a large savings investment or have been able to secure temporary funds whilst having an unsold home, you might be able to make this purchase happen. It can be very costly to own two properties at once, however you might then have the flexibility in deciding when to put your previous home on the market.
Before you make this leap, consider this: Is your current home marketable? Will it sell in today’s buyers’ market for the amount that you want or need for making sense of buying the second home? What will happen if the market declines and you are left with offers for less than you desire?
Selling First
Selling your current home first, before you begin any negotiations for a new home, is a smarter and safer option than buying first. Depending on the closing date, however, this may also mean that you’ll require some interim temporary housing until you find your dream home. This might also mean double the work of moving, interim storage and rental costs, and other inconveniences. The inconveniences likely outweigh the large setback posed by buying first and not being able to sell your current home, however.
A major advantage to selling your current home first is that you are likely to be more successful when making an offer on your second home because you can have a significant amount of cash ‘at hand’ to put down. This can strengthen your negotiations and show sellers that you are serious.
Subject to Sale
Buying a new home subject to the sale of your current home sounds like an ideal proposition. In some markets, however, sellers might be less open to making this sort of accommodation and may instead choose to go for a buyer who already has made the sale and has cash at hand.
Imagine this scenario: You make an offer very close to asking price in order to get your offer accepted. Then, you’re under a great deal of pressure to hurry up and sell your home. You might end up taking less for your current home and end up paying more for the new home. Additionally, if a “subject to sale” offer is accepted by the seller, there is often a 48-72 hour clause in place, which means that if, somehow, before you successfully sell your home, someone else comes along with a solid offer to the seller of your hopefully-new-home, the seller can demand that you have only 48-72 hours to remove the subject to sale condition. That could mean you having to hurry up and take anything for your house or the seller goes with another solid offer and you completely lose out on the new home.
As you can see, this is more of a roll-of-the-dice option than selling first. You might not even end up with a new house at all. Generally, sellers look for solid offers as close to the asking price as possible, which might not be possible when you’re in this situation. Furthermore, negotiating the dates so you can accommodate both the buyer of your previous home and the seller of your new home might be tricky.
Making Your Decision
These challenging options can be better elucidated for you when you have an experienced Realtor® working alongside you. Make sure that whomever you choose to represent you has the expertise to walk the balancing act with you and has your best interests at heart. If you would like to know more about these options, feel free to call your City of Coquitlam Realtor Jessica Chen-Sargent at 604-561-8892.