Real Estate Article: The Buy-Sell Dilemma
09/21/2002

The booming of the real estate industry in the last couple of years had made every home owner a winner.  Every house’s equity value had increased to a point that prompted many smart home owners to sell their old houses and buy a bigger, better house for them.
 
However, under such circumstances, should one buy first or sell first?
How do you jump from one house to another without owning two houses simultaneously?
How do you avoid not owning any house at all for that matter?
 
Most moving-up and trading-down homeowners constantly struggle with the dilemma of whether to buy first, then sell, or sell first, then buy.
 
Never the less, with real estate properties going sky-rocketing in prices, more and more people is willing to trade up or trade down.  The reason is obvious—like stock market, when something goes up in value, prompt more people to sell, then the more it goes up in value.  At this time, if you don’t sell it, then it is only paper money, then you will never see the profit if one day the market goes down.
 
For example, two years ago you have bought a $300,000 house.  This year, the house is worth $380,000.  The value of the house had increased $80,000 in two years.  Add your down pay to that, your equity is at least $130,000.  Now, if you use $100,000 to down on a $500,000 house, then you will still have $30,000 in your pocket.
 
This is precisely why home owners are trading up or down right now.  However, to sell and buy is big decision in your life, please be advised that you should take many things, including the current market and your own personal circumstances into considerations.
 
Scenario One:
Some homeowners are affluent enough to buy a new house first, and sell the old one at their own leisure and pace.  This is the best possible way for someone with enough money to down on the second house without selling the old one.  Throughout the whole ordeal, the home owner and his family will always have a house to stay.  Selling the old house at his own pace, chances are that he can get a better price on the house, too.
 
Scenario two:
If you need to the equity money from selling your old house to down on the new one, then, you need to sell your house first, and then buy a new one.  Some lucky folks are able to negotiate buying and selling escrows that close simultaneously.   However, before you sell your house, you really can’t do anything even if you find your dream house.  Even if you put a contingency on your contracts, stating that you will not sell your old house till you’ve bought a new one.   Most other sellers and buyers are not that willing to take these conditions.  However, if they really like your old house, they will wait.  You will probably loose some value in the old house and it might take longer to sell.   Therefore, sell first will be the better option to go for the most part.  You can get a much better price and sell much faster this way.  However, you might not find your new dream house in time, and you might have to move to a temporary quarter for a while.
 
If you decide to sell your house first, then there are other steps you can take to protect yourself a little bit from being a homeless:

• When selling the old house, ask for a longer escrow period—45 to 60 days if you can.  This will buy you some time, probably 15 to 30 days so you can look for a house.
• On your contract, have your agent state that you do not have to move out of the old house until several days after closing escrow.
• If you have a long gap between moving from your old house to your new house, you can negotiate with the new owner of your old house and try to rent your old house back for a month or something.  However, this decision is entirely up to the new owner.
• Use the same agent to sell and buy.  A good agent will help you out a lot!  A qualified, experienced agent will sell your house in time, try to get you into your new house in time and negotiate with other agents, and catch the best timing in the transition of selling and buying— after all, that’s what they do for living.

  The bottom line is, find a reliable agent!
 
Good luck!
 
Please call Grace Hsiung at 626-712-9088 or email to hsiungbobo@yahoo.com .

Close Window

Serving Areas: San Bernardino County (California), Riverside County (California), Los Angeles County (California)
Serving Cities: Chino Hills, Chino, Eastvale (Corona), Walnut, Diamond Bar, West Covina, Rowland Heights.
#1 Realtor, Chino Hills #1 Realtor, Chino Valley Local Top Agent, Chino Hills Real Estate Specialist,
Chino Hills Real Estate Professional Realtor.