When to buy a home if you have a house to sell.

In our changing market, I've seen many buyers lose contracts because they had a house to sell before they purchased another. A common statement I've heard from all of them is: "When we find the perfect home, we'll jump on that.... but we don't want to put our home on the market until that point."

Essentially, what they are talking about is putting an offer on a home contingent on the sale and closing of their home.

In a 'seller's' market this is a popular way of buying homes. I did it in 2004 when I moved from a condominium to where I live now. I gave myself 2 months to sell and close on my condominium and knew if I priced it right it would happen. I sold my condominium in less than 2 weeks and closed with time to spare.

However, there is a world of difference in the Central Ohio market between then and now. Back in 2004 there were less than 15,000 properties for sale in Central Ohio. This was definitely a sellers market, where there were more buyers than sellers. (low supply, high demand)

In 2007, the market is different. It's still good, but now there are 19,265 active properties as of today in the MLS. Home sellers are a little more nervous and if they are represented by a good agent, they will be hesitant to take a home sale contingency. They know if your property isn't desirable or priced aggressively, your home could take too long to sell. They basically lose that time on the market while your home is waiting to sell as an active listing.

What to do if you're thinking about buying a home:
If you are serious about buying a home 'down the road', put your home on the market now and find areas that you want to live in. The great thing about this market is that there are a lot of great properties out there and there will be others when your home sells. When your home gets a solid contract, know what is available and be prepared to write an offer. Get pre-approved through a reputable lender and aggressively tour homes in the areas you want. You will most likely find the home you want or one close to that.

Why this is good:
In the scenario where you write a contingent offer and it is accepted, you are under a lot of pressure to sell and sell quickly. How do you sell quickly in this market? You must make your home stand out from the competition by quickly putting in sellable condition and making the home more attractive to buyers by dramatically sacrificing your equity. This is ugly, it's very stressful and you lose a ton of money.

So, if you want to buy a home, put your home on the market now and you can protect your equity. Price it fairly, but this way you don't have to 'take a beating' because you are under no immediate pressure to sell.

I had two buyers almost go to divorce because they had a home sale contingency, but weren't able to properly prepare the home and price it well enough to sell. They lost out on the contract and their dream home sold two weeks later. I felt very bad for them, but if they prepared for this scenario earlier it wouldn't have happened.

If you have any questions or want to talk to me about your situation, please email me at: david.adrian@kingthompson.com.