Negotiating an offer

You may have heard the phrase “your first offer is often your best offer”. I’ve found this to be more or less true. As noted above, the longer your house remains on the market, the more it becomes discounted in the buyers mind. Just like it will for you when you go shopping for one. The flip side to the above point, occurs when you have a high demand home in a hot market, and you may be in a position to attract multiple offers. This is the best case scenario, as it will cause buyers to negotiate with each other instead of you. You’ll see them adding to the price, dropping conditions, and doing whatever it takes to give you your preferred closing date. This usually leads to ear-to-ear smiles and lots of high fives at the kitchen table, something that never gets old for me.

Either way, whether it’s a bidding war, or a conventional single offer, rest assured that every single detail will be taken care of by me to fully protect your best interests.

Do I buy first, or do I sell first?

Well…that very much depends on your situation. First, let’s tackle the best case scenario…buying with a condition of selling your home. If you can convince a seller to work with you under this condition, it’s by far the safest way to go. You won’t be homeless, you won’t own 2 homes, you won’t settle for a home you don’t love, you won’t be forced to sell your home for less than you were hoping to. Sounds great doesn’t it?! One problem…most sellers don’t want to work with you, and you won’t get access to the best deals. They will sell right away to a firm buyer. The time where this tends to work the easiest, if you’re buying a house that’s worth around double your markets average, and you’re selling a house that is around or below your markets average.

However, that rarely happens, so let’s look at the most common scenarios. All of these assume you don’t have the cash to buy the next house without selling your current one. If you do, hats off, well done, you’re free to do as you please in any sequence you choose.

Own a high priced and want to downsize to an average home.

This is the toughest move to make, both emotionally and logistically. Nobody is going to want to accept a conditional offer from you, so you’re almost always going to have to sell first. As long as you’re certain that you want to, or perhaps you need to downsize, you’ll make this work…provided that what you want exists in abundance. I can help you determine that with a detailed look at the market and how it projects out in the short term based on past performance. There are some scenarios where even if you don’t have all the cash to buy the next one, you can still buy first if you’re financially sound. Obviously every situation is different, so nothing is absolute.

Own an average home (with lots of equity) and want to upgrade to a larger home.

The key here is the equity. If you do have a lot, you’ll be able to buy first. This is because you’ll have a large buffer. Let’s assume you’re buying a house for $700,000 and your house is worth around $550,000. If you need every dollar of the $550k to qualify for or comfortably afford the next one, you shouldn’t buy first. If however, you could comfortably make the move if you were to get $520k or $530k, you’re going to be in fine shape. It’s really a matter of your risk tolerance. I’ve seen this scenario play out with so many people, and rarely if ever do they get anywhere close to the low end number we prepare for. They will almost always get really close to or above the high number. A lot of this is market dependant though. In a hot market, it’s relatively safe and predictable, in a slow market, it could cause some serious anxiety and unease. Again, your risk tolerance plays a key role in whether or not you can handle it.

Own an average home (with little equity) and want to upgrade to a larger home.

If you can’t get a conditional offer accepted in this case, I’m going to have to advise you to sell first. There is just too much that can go wrong here. Using the above example, if you need to the entire $550,000, there are just no guarantees that you’ll get it. It’s tough, because you probably will, so it’s tempting, but ultimately, the risk is too high and you could get yourself into some trouble.

Making a lateral move.

Size and price don’t always drive a move, sometimes you need to move to a different location for whatever reason and the price will stay the same. In these cases, I would revert back to your level of equity and risk tolerance.

Whatever move you’re trying to make, understand why you’re making it, and use that as a GPS to keep you on track and block out the many distractions and twists and turns that will inevitably creep into the process.