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Buy or Sell your Home First? Which is your Best Option?

If you own a home and are considering the purchase of another home, the question of whether you should buy your next home first or wait and sell your existing home always seems to arise. Everyone's situation is certainly different, but it can help in making a decision to understand the full range of options available to you.

In the event you choose to sell your existing home first, you will have the advantage of know precisely how much money you will receive at closing, which can be quite helpful in establishing a price range for the purchase of your next home. Of course, you must also consider the fact that you may not be able to find another home that is satisfactory prior to closing on your existing home. That could mean that you will either need to find somewhere else to live on a temporary basis or else settle for something that may not be quite what you wanted. If you choose to live somewhere temporarily until the right replacement home does come along, you should be prepared for additional costs that can arise, particularly if it takes awhile to find exactly what you are looking for.

On the flip side, if you choose to buy first, you must live with the knowledge that you may not know exactly how much you will be walking away with when your home does sell or even when that will be. This means that you may be facing the reality of two mortgages until your current home sells, something that may not be financially feasible for you. You may also have trouble being approved for a mortgage on the purchase of a second home when you still have a mortgage on the first home.

When trying to decide whether it would be best to sell or buy first, it is always important to consider the current market conditions. For the most part, it is usually best if you buy another home before selling your existing home if the current market is a seller's market and home prices are on the rise. The thought process behind this is that if prices are on the rise, it is better to lock in the price of the new you will be purchasing while allowing you to sell your existing home at a higher price with the assumption that prices will continue to rise.

On the other hand, if you are in a buyer's market and home prices are on the decline, it usually makes more sense to sell your existing home before proceeding with the purchase of another home. This strategy will allow you to lock in the amount you will receive for the sale of your current home before the housing market declines any further and you will also be able to better take advantage of lower prices when you buy later.

It should be kept in mind that the housing market in any particular area can change quite fast and market conditions can be based on a variety of different factors. Remember as well that while the national market may indicate one thing that cannot always be true of a local independent market. A professional real estate agent can assist you in determining the local market conditions within your own area.

If you are really interested in buying another home before waiting to sell your existing home, one option to consider is making your purchase offer conditional on the sell of your existing home. Through this type of contingency, your offer will only become binding if you agree to a purchase offer on your existing home with a specified time period, such as 30-60 days.

For your own protection, it is important to be certain that any type of conditional offer clearly states the precise condition that must be met as well as the length of time that is available for that contingency to be met. In some instances, sellers are more or less willing to accept a conditional-on-sale offer based on market conditions and how motivated they are to sell.

Ultimately the decision of whether to sell first or buy first is completely a personal decision that should be based on your own particular circumstances and local market conditions. If you decide that you would like to make an offer to purchase a home, do ensure that your offer is phrased correctly for the contingency on sale to be certain that your best interests are represented. Also, if a prospective buyer makes a conditional offer to purchase your own home, have the offer carefully reviewed as well.



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