It is one of the top 3 questions I get asked, as a REALTOR®. I get asked this question by about 85% of my home Sellers. The other 15% make their own decision without consultation and call me when they're ready to make a move. And THAT, my friends, is exactly why I am answering this question in my blog this week. Should I find a home before I list my home for sale?
The short answer is that it depends. There are quite a few factors which need to be taken into consideration first.
The first two questions I ask my clients in response to the burning question are:
Do you need the proceeds from the sale of your current home in order to purchase a new home?
Do you have a mortgage that needs to be paid off in order to qualify for a new mortgage?
Surprisingly, many don't even know the answer to that question and if that is the case, we stop right there, put the pause on home searching, and connect our Client to an excellent mortgage lender for a pre qualification. Listen, SO MUCH can change from the time that you purchased your current home until this moment in time. Did you get a raise? A pay cut? Did you switch jobs? Do you qualify at all? Do you qualify for the same amount? Do you qualify for more? Do you qualify for less?
There are a lot of questions that can be answered by first talking to a mortgage lender. Never assume that you are qualified for a specific price range. It will likely cause unnecessary frustration. The Lender will be able to tell you not only if you have to sell your home in order to buy a home, but they will also help you determine the ideal price range for your next home based on the amount you qualified for, your desired monthly payment, taxes, etc.
Once a client determines that they are in fact qualified to purchase a new home and that they do need to sell their current home, in order to buy, then my answer is always:
NO, you should not search for a home without first listing your home for sale.
I know... it's not what you want to hear, but the main reason you should list your home first is because you will not able to move forward with a legitimate offer on a home that you love, until your home is under contract. You will find a home that you love and you will be heartbroken when you find out that you can't buy it. That is the reality. Yes, technically you can write an offer. Yes, there is a thing called a "home to sell contingency", but that does not mean a Seller will entertain your offer... unless of course, the property has been sitting on the market for an extended period of time, which is an indication that the property is priced above what every other buyer in the market is willing to pay for it. Except for you. This is another issue for another day. Onward.
An offer that is contingent upon selling another home with no offers on it is an undesirable offer to a Seller, but if your home is not even listed on the market yet, it is a true waste of time, energy, and emotions, including but certainly not limited to, your own. Here's why: You cannot guarantee that or when your home will sell. Point Blank.
Suppose you list your home above market value. It likely won't sell until you adjust the price to market value, which could take as long as you want it to take, based on your understanding of the real estate market and advice of your REALTOR®. Suppose your home is in poor condition. It may not sell quickly. Suppose your REALTOR® is terrible at marketing. It may not sell at all. Suppose you are located on a main road or have no off street parking or have an under ground fuel tank, or a septic system that needs replacement, or a title issue.... do you see what I mean? Real estate sales are never straight forward. They are complex, which is why real estate professionals exist as an industry. And contingent offers add a whole separate layer of complexity to the transaction. Sellers simply want to sell their home. They don't want additional complexity, even if you are technically able to write a contingent offer.
Without the home being listed, the Seller is having to take his/her home off of the market or change the status to "under contract- continue to show", which deters other, more motivated buyers. A motivated buyer likely will not want to waste time going to a home that isn't immediately available for purchase. The Seller runs the risk of losing qualified, motivated, non-contingent offers and of you not holding up your end of the bargain. The risk to them more often than not, outweighs the reward.
On top of that, a contingency enables the Seller (at least in the State of NJ) to accept a non-contingent offer, if one is submitted. So even if you were to sign a contract on a home that you love, the chances of another Buyer coming in and outbidding you is quite high, since the contingent offer is considered "weak". An excellent REALTOR® will not waste time writing an offer that is never going to be accepted, because they know the other side. Great Agents educate their clients on how to write strong offers within the current market conditions, so that they ultimately achieve their goal and avoid wasted time, energy, and frustration.
I realize that that answer isn't always what we want to hear. Home shopping is exciting, so it is understandable that we would get excited and want to begin the process, yet it is just that... a process. It is important to be careful not to jump the gun out of emotion, but to pause and follow the process. When dealing with likely the largest investment of your life, you want to make sure that you are handling everything with great care. There is one simple thing to remember that will always set your feet on the right path and it is this...
Never make a real estate move without first calling your real estate professional.
Every rule has exceptions and only a qualified, licensed, experienced real estate professional will be able to advise you on the best steps for your goals and desires.
There is no greater feeling than moving into a new home! If you are in the market to buy, sell or invest in real estate, reach out to us here at Rockstar & let us set up a one on one virtual or in person consultation to ask lots of great questions, help you learn about the process, and get you set on the right path for you. Until next time, Rockstar Community, I'm sending you peace, love, & good vibes from my home to your's.