by Neil Jenman
Reading Time: Apx 3.5 mins
It’s one of the most common questions from home-sellers: “Do we sell first or buy first?”
The most common answer – from agents – is “sell first”. This means that agents get a quick commission from the immediate sale of your home.
It is also means that you can find yourself near homeless.
What happens if, after you sell your home, you can’t find another home that suits you?
You’ll be in a real jam, that’s what. Sure, you can place your possessions in storage. You can live with relatives or friends. You can live in a motel. Or you can join hordes of wanna-be-tenants desperately searching for a home to rent.
But surely, none of these options is pleasant.
So, it might be better to buy first – before you sell.
One thing’s for sure – if you stay in the same area, agents will treat you better. As a buyer with a home to sell, you’re real estate royalty.
What happens if you buy a home you love, then can’t sell your own home?
Agents love “committed sellers”. And the most committed are those who need to sell fast to buy a new home.
But therein lies another potential problem – and a dangerous one. If you are under pressure to sell – and buyers discover your dilemma (agents tell them. Plus, word gets around) – you will surely get hit with low offers.
It’s not unusual for desperate sellers to sell for hundreds of thousands of dollars less when under pressure.
Of course, there is always bridging finance. But if you still can’t sell for a good price, you suffer twice – the pain of selling low plus the pain of bridging finance.
So maybe agents are right. Maybe it’s safer to sell first.
SELLING FIRST IS NO GOOD. BUYING FIRST IS DANGEROUS
Selling before you buy is risky.
And buying before you sell is also risky.
So, if you shouldn’t sell first and you shouldn’t buy first, what should you do?
DON’T BE BLUFFED OR BULLIED
Real estate is riddled with intimidation. People with ulterior motives bluff sellers or buyers into believing that “this is the way it’s done”.
But if the way it’s normally done does not suit you, if it’s too stressful or too risky, don’t do it.
Most real estate consumers go along with what they are told to do. They are bullied and bluffed en-masse. Consequently, they lose massive amounts of money while under severe stress.
The solution is simple. What’s amazing is that more sellers don’t choose this wonderful less-stress and almost no-risk option.
SELL AND BUY SIMULTANEOUSLY
Rather than facing the risk-filled decision of whether to sell first or buy first, the sensible approach is to do both together.
And yes, it is possible. Regardless of what you may be told, selling and buying simultaneously is a safe way to change homes.
As a homeowner one of the most important points to realise is this: It is your home, you set the conditions under which you sell your home.
Due to their lack of experience most sellers think that the only factor over which they have any say is the price.
But price is only one factor. Another factor is terms (conditions) under which you sell. You can make the sale of your home conditional upon any term you wish. You could, if you wish, make the sale of your home conditional upon the weather. Or conditional upon your favourite sporting team doing well.
So, leaving aside absurdities, let’s focus on a reasonable condition under which you sell your home. Make your home sale conditional upon you finding another suitable home.
Some agents may tell you – wrongly, in most cases – that such a condition will turn-off buyers. Nonsense. If buyers like (better still, love) a home, they will wait for you to find another home.
Make it clear that you will not procrastinate. Assure buyers that you will make a concerted effort to find a suitable home.
LISTING IS NOT SELLING
Listing your home for sale does not mean you must sell your home. Signing a Listing Contract with an agent is not the same as signing as Sales Contract with a buyer – although you should never sign a Listing Contract without deleting nasty clauses inserted by agents (such as being able to charge you commission whether you sell or not).
Consult your legal advisor and have a clause inserted in your Sales Contract (written in “legalese”) that says something such as: “The vendors will not be compelled to sell this home until they find another home to buy.” You may add a time limit if it makes the buyers feel better – say, six weeks. If you don’t find another home in that time, the sale will not proceed.
“SUBJECT TO” SALES
You can do the same as a buyer albeit with less control. It is common for buyers to agree to purchase a home “subject to” the sale of their existing home. These sales are known as “subject to” sales.
Often, in consideration of being granted the convenience of being able to buy a home “subject to” the sale of their existing home, buyers will be less inclined to haggle over price.
These conditions are rarely available with auction. Agents state that an advantage of selling by auction is that you have an “unconditional sale”.
But that’s hardly an advantage if you repel prospective buyers plus get a lower price.
Most agents have one dominant thought – make a sale fast at any price. They don’t like the hassle or insecurity (to them) of “subject to” sales. But what’s best for the agent is often not what’s best for you.
YOU SET THE TERMS
You – as a seller or buyer – can either set (or offer) conditions under which you sell or buy.
Don’t fall for high-pressure lines such as you’ll “never sell for such a good price” or you’ll “never find a better home”. Good deals are like buses. There will be another along shortly.
Setting the conditions under which you sell or buy your home gives you an advantage that many sellers or buyers don’t enjoy.
It eliminates the risk of being “caught” with nowhere to live or being forced to sell low. It reduces stress.
It also makes selling and buying a home enjoyable.