So you want or need to buy a new house, but you must sell your current house before you can close on the new one.
Do you wait to try to sell your house until you have a contract on a new house, or do you wait to make an offer on a new house until you have a contract on your current house? This is a bit of a puzzling question in the current market, and two of my clients are currently wrestling with this enigma.
Option 1 - offer to buy first- PRO - as a result of first negotiating on the new house, you can more precisely price your existing home because you know what you "need" to get out of the sale.
- PRO - you don't have to wonder if the house you love will still be available once you have a contract on your current house.
- CON - you will likely have less negotiating ability since your offer to buy is contingent upon your current house selling.
- CON - even if you negotiate a deal on the house you hope to buy, the seller will likely include a kickout clause, which means you might not end up being able to buy the house after all!
Option 2 - offer for sale first- PRO - you'll know exactly how much you can spend on your new house, because you'll know what you will get out of your current sale.
- PRO - you'll have lots (hopefully) of negotiating power on the new house, since you will effectively be making an offer sans home sale contingency.
- CON - if there was a house you had your eye on when you first started offering your current home for sale, it's possible that it will already be sold by the time you have a contract on your current home.
- CON - if you don't have a replacement house picked out, you may feel pressured to select a less-than-perfect new house because you don't want to lose the buyer you have for your current house.
Wow! It's a tough decision! Each buyer's (and seller's) situation is unique, so I can't universally recommend one of the courses of action above, or the other. But we do need to understand all of the pro's and con's of each strategy so that you make the best decision on how to proceed!
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