Buy First or Sell First? Laird Bradley & Mary Chamberlin Break It Down
Laird Bradley, principal broker and owner of Williamson Group Sotheby's International Realty, says, “This question poses the ‘chicken and egg’ dynamic in real estate form. Most buyers begin looking for a new home, usually online, prior to even listing their present home for sale. This is a reasonable early approach to gaining some insight into an unfamiliar real estate market. The next step of ‘real’ real estate searching usually involves contacting an agent.”
There are pros and cons to each side of the debate. Mary Chamberlin, president of the Upper Valley Board of Realtors says, “Most people look to do both at the same time. The main reason for this is due to having to obtain financing. Many people cannot afford to carry two mortgages at the same time. Or they simply do not want the stress of having to maintain two homes. Those fortunate enough to be able to carry two mortgages usually purchase a house, move without feeling rushed, and then put the first home on the market. This strategy is all for the individual’s convenience. It is less stressful for many people to move out, stage the first home, and not have to be interrupted in their daily routine.”
The first step is to examine the current housing market. Will your home sell quickly, or is the market slow for your type of house? Also, what is the market like in your proposed new neighborhood? If you plan to move into a popular area, one with an in-demand school district, for example, houses may be in short supply.
Next, take your financial situation into account. Would you be able to carry two mortgages for a period of time? Do you need the equity from the sale of your current house to purchase the new one?
Mary advises, “One cautionary note to anyone considering carrying two mortgages: make sure you can afford it for a minimum of one year. That way, you are not stressed to sell at too low a price. The whole reason to do this is for your convenience and low stress, so make sure you are not adding unnecessary stress.”
The final consideration is your comfort level. How confident are you about selling your home and buying the new one? How flexible will you be should things not go as expected?
Laird Bradley says, “It helps if you are able to get an estimate of probable selling price for your home to help you budget appropriately for a home in a new area. Real estate brokers and salespeople will provide a Comparative Market Analysis to satisfy this first threshold of due diligence for a homeowner. . . . We advise our sellers not to accept an offer contingent upon the sale of their home that hasn’t been placed under contract. A contract to sell real estate is binding and, unless the contract is carefully drafted with an ‘escape clause’ (commonly called a ‘kick-out’ clause), a seller can be stuck and unable to respond if another buyer who has already sold their home and can buy immediately makes an offer.”