Should you buy first or sell first? I get the dilemma: You don’t want to lose a whole bunch of money, but you also don’t want to end up homeless either. Today, we’re going to discuss some mistakes that buyers and sellers make that can cause them to lose sleep, money, and even their marbles. One of the easily avoidable traps I see people frequently fall into can be summed up in this example:
Tom and Mary are excited to move, but they want to make sure they find the right place first, so they go out with their agent right away to start looking at places. It takes a little time, but they find a place that they love. They go to write an offer, and at this time, they start talking to a mortgage broker who informs them that they can’t buy a property without selling their property first. Oops.
Since they just love the property, they decide to put in an offer anyway, one that’s subject to the sale of their home. After a lengthy negotiation, they come to an agreement on price and terms. It’s about $10,000 more than the market value because the sellers demanded a premium due to the risks involved with the clause that makes the transaction subject to the sale of the buyers’ home. They decide to go for it.
Tom and Mary also understand that if another offer comes along, they’re going to have to waive all of their conditions, not just the sale of their home. That means that if something comes up within the week, they’ll have to waive their financing and home inspection right away.
Tom and Mary are eager to get their home going, so they don’t have time to make the necessary repairs or even stage their home. They decide to put it at about $5,000 under the last comparable sale—they figure it will sell a little faster this way too, and what’s another $5,000?
Things are going well on the purchase of their dream home; the home inspection went well, and the last-minute financing was sorted out as well. Now they even have an offer on their place. However, this offer is about $20,000 under their already aggressive price. They can’t accept that; that’s crazy! Just then, they get a notice from the other agent, saying that there’s another offer that has come in on their dream home. Now they have 48 hours to waive all of their conditions. They decide to think about it overnight.
After a sleepless night and a lot of arguments, they decide to accept $15,000 lower than their asking price from the current buyers. So they’ve now lost $20,000 on their old home and have spent an extra $10,000 on the purchase of their new home because of their emotional attachment. They decide to waive the conditions on the financing, the home inspection, and even the sale of their current home. Luckily, everything goes along fine, and Tom and Mary are now in their new home.
They’re fairly happy, until a property comes on the market three doors down with an identical floor plan—for $10,000 less than for what they paid for theirs. Please don’t fall into this trap. Your numbers and stress could be smaller or significantly larger. It didn’t have to go this way for Tom and Mary, and it definitely doesn’t have to go that way for you. There are all kinds of systems and processes that we can utilize that will save you time, money, and heartache.
Remember, sharing is caring. If someone you know is in this situation, please share this with them. For any questions you have about this or other topics, feel free to get in touch with my team and me. We’re agents of change helping you solve your problems and realize your dreams.