Century 21 Associates Realty LLC 
     Karen J. McLinden
      Phone 508-677-3233
       Fax 508-679-2006
       657 Pleasant St., Fall River, MA 02721 
Residential Real Estate, Commercial Real Estate, New Construction, Investment Property, Rentals, First Time Home Buyers, Relocating Assistance, Short Sale Assistance.   Areas Include But Not Limited To: Fall River, MA - Swansea, MA - Somerset, MA - Westport, MA - Dartmouth, MA - Tiverton, RI - Assonet, MA - Freetown, MA - Berkley, MA - Taunton, MA - Dighton, MA - Rehoboth, MA - Seekonk, MA - Warren, RI - Portsmouth, RI - Middletown, RI - Little Compton, RI - New Bedford, MA - Lakeville, MA - Middleboro, MA - Fairhaven, MA -   Wareham, MA

  • Home • Up • Buyers • Local • News & Info. • About • Art by Karen •

The Buy-Sell Dilemma

Should I buy first or sell first?  This is a common question most sellers ask.  

Wondering how to make the jump from one house to the next without owning two simultaneously--or, perhaps worse yet, owning none at all? You're not alone. Most moving-up and trading-down homeowners struggle with the dilemma of whether to buy first, then sell, or sell first, then buy.

Some homeowners are financially secure enough to avoid the problem by buying a new house and selling the old one at their leisure; others are mobile enough to sell first, move to temporary quarters and buy later. And some lucky folks are able to negotiate buying and selling escrows that close simultaneously.

Most people either make offers to buy first, then hope for a quick sale of their existing houses, or put their houses on the market, then find new housing before escrow closes.

The primary advantage of buying first is the ability to shop for the new house and feel completely secure in that decision before putting the current house on the market.

Buying first is a harrowing experience, the harrowing part is the possibility that the current house might be on the market for a longer time than expected or need to be sold at a lower than expected price.

One way to avoid that risk is to make the purchase escrow contingent on the sale of the current house. However, it's  rare that a seller  will accept such an offer unless the market is weak, the house is a tough sell, the buyer offers an especially attractive price and favorable terms, the buyer's own house is already in escrow, or the seller simply is in no hurry to move.

Some sellers will consider this if there is an escape clause that gives the seller the right to continue marketing the house and requires the buyer either to walk away from the transaction or to waive the contingency if the seller receives another acceptable offer.

The seller will say: I will take your offer, but I am going to leave my house on the market. In the event that I receive another offer that is acceptable, I will give you, for example, 48 hours to remove the contingency, at which time you will have to either buy the home before your home is sold or lose the home to the next buyer and start looking again.

This 'two houses are better than none' scenario can prove costly because you must  make two mortgage payments. Renting the for-sale house to a tenant can offset some of the cost, but finding a buyer for a tenant-occupied home presents other difficulties.

Buying first can prove costly in other ways as well.  By buying first and selling second, you are putting yourself in the position of paying more for the up-leg property and probably selling for less on the down-leg because you are under the gun to sell before someone else bids on the house you want to buy.

On the flip side, the primary advantage of selling first is a negotiating position of maximum strength on the sales transaction because there's no pressure to sell quickly. Selling first also eliminates the burden of carrying two mortgages simultaneously.

The downside is the strong likelihood of at least a short-term visit to "limbo land".  Many times, people list their home for sale, then start looking at a home to buy. They don't find anything because the home they are looking for is special, unique or tough to find. Then they decide to rent for a while. That requires a double move, which is not possible for some people. 

The obvious way to avoid the temporary housing scene is to make the sale of the current house contingent on finding a replacement home to purchase.

People buy homes that are sold contingent on the seller's buying another house. The only problem is that it puts the buyers in limbo because they don't know whether the person they purchased the home from is ever going to find a house to buy.

This strategy is most likely to succeed if the market is quite strong, the seller's house is truly a rare find, the price and terms are highly favorable for the buyer or the buyer is in no hurry.

Selling subject to finding another house puts the seller in a good position because the burden of uncertainty falls on the buyer.

Many people manage to avoid limbo by leasing back the sold house for a short period after escrow closes. Sellers shouldn't count on an extended or open-ended lease-back period, however, because if the buyer intends to occupy the house as a principal residence, the lender probably won't allow a lease-back of more than 30 days, and the buyer won't like the possibility of having to evict the sellers if they can't find a new house.

The seller's odds of a lease-back are better if his or her next house is already in escrow.

Sometimes the seller will decide to rent a residence, live with a roommate, occupying corporate housing, move in with family or friends, or camp in a hotel room until a suitable house is purchased.  These short-term living arrangements could  be uncomfortable, inconvenient and expensive.

It's not uncommon for personal circumstances to dictate how homeowners resolve the buy-sell dilemma.

Beyond personal circumstances and all else being equal, a final consideration for homeowners should be the state of the local housing markets.   A low inventory of homes for sale and demand among buyers tilts the balance toward making a purchase offer first, then putting the house on the market.

Conversely, a large inventory of houses on the market and a scarcity of buyers points toward putting the house on the market, then shopping for a replacement. The expected direction of mortgage interest rates may factor into this complex equation as well.

The other issue worth considering is whether houses are appreciating or declining in market value. If prices are headed up, buying first makes sense. If prices are headed down, selling first is smart. In a mixed-signals or transitional market, the best strategy is far less obvious.

Whether to accept a contingent offer, whether to buy first, then trust me to get your home sold, or whether to sell first and trust that the market isn't going to get away from you because prices are rising--all that comes back to what's happening in the market and what works best for you!

Back to top





 2013, Karen McLinden & Century 21 Real Estate LLC. CENTURY 21 is a registered trademark licensed to Century 21 Real Estate LLC. Equal Housing Opportunity. Each Office is Independently Owned and Operated.