Over
the last several years most buyers and sellers have dealt with either a
buyer's or seller's market. A buyer's market is what the market is
called when there are more sellers than buyers, so the listings take
longer to sell and buyers can really shop around until they find
exactly what they have been looking for. A seller's market occurs when
there are few homes for sale and buyers have a lot of competition for
homes. For the first time in a long time, the market is shifting toward
a balanced market, where it favors neither buyers nor sellers. When the
market is more balanced buyers and sellers need to approach the buying
and selling of real estate a bit differently.
Great Tips for Those Buying and Selling in a Balanced Market
Most of the time, those that are selling their home can afford to
buy a new home before they sell their old home. In a balanced market
this is a very risky move because you may be able to find a home that
you like before you are able to sell your home. A balanced market often
causes homes to sit on the market for a bit longer, so you should be
sure that you can afford to have the home sit on the market for a few
months before it sells. When the market is balanced you also cannot
count on the selling price of your home, so buying a new home before
you sell can leave you in a bad place if you don't have savings to fall
back on.
On that note, it's important not to count on a specific selling
price in a balanced market. Because homes sometimes take a bit longer
to sell, it's important to be open about the selling price of your home
if you want it to sell. Buyers are often more picky, so you may have to
drop the price of your home if you want it to sell quickly. If you
count on the selling price of your first home when you buy your second,
you can end up in some serious trouble. For this reason, it is often
best to put off buying a new home until you sell your current home.
Another option when you are selling and looking to buy at the same
time is make a new buy contingent on the first home selling. This can
be a risky move, but if your offer is good many sellers will accept the
conditions of your offer. Your Realtor can write up the offer so that
you have six months to sell your home before you close on the new home.
This will allow you some time to attempt to sell your current home
before you officially get in over your head with a new home. Again,
it's risky to put this into your offer, but if you are careful it can
work for you.
The Bottom Line
The bottom line is that in a balanced market it is risky to buy
before you sell. Depending on your specific market it can take months
to a year to sell a home, so it's best to wait it out. A good tactic
that many people use in a balanced market is to sell your current home
first. This will give you plenty of time to decide what sort of home
you want, so that you aren't rushing through the home selection
process. By the time your home sells you will know exactly what you
want and you can go for it. If it happens that your home sells really
quickly in the balanced market, that's okay! An interim rental will
cost you very little and will allow you to sell and move out of your
first home, but continue to keep looking for that perfect home to buy.
You will also know exactly how much money you have to put into your new
home if you sell first, so you can buy a new home with confidence.
Another option is to sell your home, but allow 30 or even 60 days to
close on it so you can take that time to either find a decent rental or
find something to buy without rushing. Long closes are often best for
all parties, so don't be afraid to ask for a long close to give you and
your family time to decide where you are going from here.
Selling first just makes the most sense. Because you don't know how
long your home will take to sell in a balanced market and you cannot
determine how much it will sell for, it is just the safest route to
take. If you are a risk taker, than you don't have to go this route,
but most people find that the sell first philosophy works better in the
balanced market.
