Best bet when changing homes: Sell first

Dear Steve,

Dear Kris,
I think you may have answered your own question with your legitimate concern about the salability of your current home. The "pros" for selling first, and then buying your new home later, outnumber the "cons," I believe.

The one real advantage of buying first is that you can shop for your dream home deliberately and conscientiously over an unlimited period, and feel fully comfortable with your buying decision before placing your old homestead on the market. If money is less of an issue for you, and you can afford two mortgage payments for awhile if your current home is slow to sell, this approach may be for you.

The big advantage of selling first is you'll know just how much equity you'll have to invest in that new castle. You also won't have to saddle your purchase contract with one of those "subject-to-the-sale-of-my-home" caveats, and may attain additional bargaining power as a result. Sellers in especially hot real estate markets are less apt to accept "subject-to" offers because there may be more expedient buyers in line.

Also, if you resign yourself to timing your buy with your sale, you might be setting yourself up for a let-down. You could locate your dream home but not be able to sell yours fast enough to grab it.

There is an interim option. You could always try to market your home on the contingency, "subject to seller finding suitable housing." This strategy works best if your home is in a seller's market and is especially desirable to a relatively patient buyer. But also consider that most buyers will have a time limit on just how long they'll wait for any place, because many are in the same position as you.

In any situation, you don't want to be forced to buy a home quickly that may not meet all your wants and needs -- and end up moving again soon as a result.

Of course, if you do sell and must vacate before you find a place, the big negative is that you'll have to figure out what to do with yourself -- and your belongings -- during this interim period. That's one reason so many extended-stay hotels and self-storage units were built in the last decade. America is more transient than ever and there's been a lot of churning of homes. Also consider a short-term apartment lease or staying with benevolent/tolerant relatives, if you have any. Even if you're faced with the prospect of moving your stuff twice before you get into that new house, you might want to hold out for that perfect house, especially if you plan to stay there for a long time.

Of course, only you can make that call. In any real estate deal, however, it's usually best to fortify your bargaining stance and not be forced into rash buying decisions. Happy selling -- and hunting!

-- Posted: Sept. 18, 2004