Buy First, or Sell First?

We plan to move this spring, since our family is growing. We thought we’d like to find the right house before we sell, but we don’t want to get stuck with two payments if our house doesn’t sell right away. And we definitely don’t want to be under pressure to find the right house if we’ve already sold ours. What to do?
---Beginning to Worry

Dear Worried,
Relax. I hear your question just about every time I do a market analysis for homeowners, and I can reassure them that, although every situation is unique, the best approach is usually readily apparent. Let’s begin with a look at different markets: in slower times such as the 1980’s, it often took 30 days or more to sell prime houses, so clients were understandably reluctant to buy their next home and hope for a quick sale of their own home. In those days we often counseled clients to sell first, with an extended closing date of 90 days or more, to allow them time to find and close their next home.

As we all know, times have changed. I can’t speak with any authority on the suburbs, where market times are much longer, but in South Minneapolis sellers generally can afford to take their time in selecting their next home, and then count on the fast market to sell their own home in plenty of time to coordinate closings. As a seller/buyer, you would try to negotiate an extended close on the home you’re buying, say 60-90 days, to give you time to sell. Of course, over the years I’ve had many calls from panicked seller/buyers who bought too soon, before their own house was ready for market. My dog-eared Rolodex has saved the bacon of many of them, as we frantically tracked down workpeople for last-minute repairs and renovations. I’ve seen both sides wrap up within a month, when conditions were ideal: great house, hot market, cooperative principals and Realtors, competent lender and title company. But it’s no fun—and downright impossible if you can’t get ready for market within a few days.

So here it is in a nutshell, Worried—if you want to avoid worry, have your house completely ready to sell before you start looking, even if you just want to peek at a few open houses. Best to select your listing agent, and get her (no gender bias here!) involved in your timetable before you start looking. If that perfect house shows up on the first day, and the seller gives you only 30 days to close, you won’t have time to paint your porch, let alone remodel the bathroom.

Of course there are situations where “buy first” is the wrong approach, notably when it’s obvious that your home would linger on the market—say, an unusual layout or hard-to-sell location. And there are times when it’s best to own both homes for a few months; perhaps to allow for a major project on the next home, or to repair and effectively stage the home you’re selling. Again, get a real estate pro involved early on, before you start looking, to help you make the right decisions. Good luck!