For the Owner/Buyer - Which Comes First? Buying or Selling?
February 24, 2010
You already own your principal residence, but you would like to purchase another home. Perhaps you have had a job transfer to a new location and you will be seeking a new residence. For whatever reason you have for moving, you have a property to keep or sell.
Some homeowners who are financially able have been deciding to keep their present home as a rental - at least until home prices improve. Others really want to sell or really need to sell before they can qualify for a new loan.
So, do you put your home on the market first? Do you look for the replacement residence first or simultaneously? Or do you wait until your home is sold and the title has been transferred?
All are possible scenarios.
If you decide to market your property first, but have a concern about selling and having no replacement property, you can list with a clause that gives you a right to find a replacement home or cancel any contract with a purchaser; usually in a limited period of time from acceptance of an offer. You could also negotiate for a rent-back period if you have not closed on a replacement home. You would need to negotiate this at the time of negotiating with a potential purchaser.
Many homesellers who look for the replacement residence first, submit offers that are contingent on the sale of their property. In general, sellers are very reluctant to accept a contingent offer as they may not be familiar with the property and may not feel that it is priced to sell. Sellers who are willing to accept a contingency may reserve the right to continue to offer their property for sale with the right to give the purchaser notice that another acceptable offer has been received and the buyer must remove the contingency in a specified amount of time or cancel the purchase agreement. A buyer could negotiate a period of time before the seller could exercise the right to "bump" the buyer. Don't be surprised if a sellers want their agent to approve your list price before entering any contingent offer. If you are in escrow, most sellers will want you to provide them with copies of the purchase agreement and escrow instructions for their approval.
The reason most seller/buyers do not want to sell first is they do not want the hassle of two moves. They also want to know that they will find a suitable property. The trick, therefore, is to make a realistic offer on the replacement property and to list one's present property very competitively. You may pay a tad more than you would without the contingency and you may sell for a tad less, but you accomplish your goal of relocating.
You already own your principal residence, but you would like to purchase another home. Perhaps you have had a job transfer to a new location and you will be seeking a new residence. For whatever reason you have for moving, you have a property to keep or sell.
Some homeowners who are financially able have been deciding to keep their present home as a rental - at least until home prices improve. Others really want to sell or really need to sell before they can qualify for a new loan.
So, do you put your home on the market first? Do you look for the replacement residence first or simultaneously? Or do you wait until your home is sold and the title has been transferred?
All are possible scenarios.
If you decide to market your property first, but have a concern about selling and having no replacement property, you can list with a clause that gives you a right to find a replacement home or cancel any contract with a purchaser; usually in a limited period of time from acceptance of an offer. You could also negotiate for a rent-back period if you have not closed on a replacement home. You would need to negotiate this at the time of negotiating with a potential purchaser.
Many homesellers who look for the replacement residence first, submit offers that are contingent on the sale of their property. In general, sellers are very reluctant to accept a contingent offer as they may not be familiar with the property and may not feel that it is priced to sell. Sellers who are willing to accept a contingency may reserve the right to continue to offer their property for sale with the right to give the purchaser notice that another acceptable offer has been received and the buyer must remove the contingency in a specified amount of time or cancel the purchase agreement. A buyer could negotiate a period of time before the seller could exercise the right to "bump" the buyer. Don't be surprised if a sellers want their agent to approve your list price before entering any contingent offer. If you are in escrow, most sellers will want you to provide them with copies of the purchase agreement and escrow instructions for their approval.
The reason most seller/buyers do not want to sell first is they do not want the hassle of two moves. They also want to know that they will find a suitable property. The trick, therefore, is to make a realistic offer on the replacement property and to list one's present property very competitively. You may pay a tad more than you would without the contingency and you may sell for a tad less, but you accomplish your goal of relocating.
posted by shirley harry at 8:53 AM
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