Buying and Selling a Home – at the Same Time – in a Buyers’ Market
Buying a home can be a nerve-wracking experience, so can selling a home. Try to take on both tasks at the same time and you’re doubling the stress. Good news: Doing some advance planning can help reduce your number of sleepless nights.
What is a buyers’ market?
Real estate is a business based on supply and demand. If there are only a few houses for sale, buyers have to compete for those available homes, making it a sellers’ market. When hundreds of homes are on the market, house hunters find themselves in stronger bargaining positions relative to sellers, making it a buyers’ market.
According to an analysis published by Zillow, the nation’s top five buyers’ metro area markets are:
In the Cleveland-Elyria-Mentor metro area, for example, the average listing spent 119 days on the market, and 28 percent of those properties had experienced a recent price cut, according to the Zillow analysis. Compare that to San Jose-Sunnyvale-Santa Clara, the nation’s top sellers’ market, where properties spent an average of 44 days on the market and the list price had been lowered on just 14 percent of those homes.
Understanding your local housing market can help you determine how best to handle your own buy-and-sell scenario.
“Buying and selling at the same time is something we help people do all the time,” said Leslie Ebersole, a real estate agent based in Chicago’s western suburbs. “The most important thing for people to realize is that, just like they’re out looking for the best home at the best value, people are looking at their home with the same lens. You have to realistically participate in the market.”
Ebersole advises seeking professional assistance early on. Meet with your real estate agent and lender far in advance. An agent who has experience in your local market will be able to help you understand your home’s value and can talk you through the various buying-selling scenarios you may experience.
In the Chicago area and many other harsh-winter markets, for example, the housing market doesn’t heat up until the weather does. For clients wanting to buy from the largest inventory and sell to the largest group of buyers, Ebersole advises hitting the market as soon as the weather gets above 40 degrees.
“If you wait until March to begin thinking about selling and you have two or three months of work to do to get your house ready, you’ve missed the window,” she says.
She also notes that for many move-up buyers, getting the absolute highest price for their home is crucial. For those clients, it may make sense to sell their home in the early spring, move in with family or into a short-term rental, and then shop for their new home in the fall, when prices — like the temperature — drop.
“In a slower market, it may feel like you have no option but to sit and wait for someone to buy your home, but it really is important that you stay knowledgeable about your market and the homes you might like to buy in the event you get an offer,” Ebersole said. “I try to take clients out every few weeks just to stay in touch with what’s available. It’s hard to make a good decision on your sale if you don’t know where you’re going.”
Option: Buy before you sell
Buyers who qualify may want to buy their new home before selling their old one. Understand that you’ll need to prove to your lender that you can cover mortgage payments for two homes without exceeding the lender’s debt-to-income ratio limits. Yes, buying a new home while you already own a home may be a financial stretch, but if you’re able, it allows you the luxury of not having to accept lowball offers.
“Finding success at buying and selling at the same time is so dependent on people’s flexibility and willingness to be adaptable,” Ebersole said. “It’s not magic, it’s really about accepting and understanding the market you’re in and making the most of it.”
While many variables can come into play when you’re buying and selling property, assembling a top-notch team of advisers and doing your homework ahead of time can help ensure your real estate transactions go as smoothly as possible.
Read the original article by Mary Boone on Zillow’s Blog.
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