Don't Monkey Around When Buying a Home

Posted on: May 25, 2007

The other day, I was viewing a program about monkeys on one of those discovery-type channels, and something dawned on me. Have you ever noticed how a monkey swings from tree to tree? He grabs one branch, swings his weight forward, and grabs another branch. Instinctively, he doesn’t let go of the first branch until he has a firm grip on the second branch. Well that describes human nature, as well, doesn’t it? This reminds me of homeowners who don’t want to sell their home until they find a home to buy. How does this work in real estate?

The best way to swing from branch to branch when purchasing real estate is to first list your property, and then make an offer on your next home when you have a solid offer on your current home. You can often get top dollar for your home if you are not under pressure to sell; and you know exactly how much money you have to spend. You don’t want to end up in a compromising situation; for instance, not being capable of buying your new home because your current home didn’t sell for the price you expected.

The other way to swing on to your next home is more expensive. Our timid buyer, let’s call him John, could write an offer contingent upon his home selling without a firm offer on his home; but he would be asking the seller to take her property off the market until his home sells. This is a riskier offer for a seller to accept, because John’s home may not sell within the given time frame; or it could sell for a lesser price, and John would no longer be able to finance his new home. Meanwhile, the seller may have lost a buyer that could have purchased the property on a timely basis; now John is forced to OFFER FULL PRICE so the seller will consider it—even in a slow market. In a hot market, these offers are rarely even considered. Therefore, it would cost John thousands of dollars more to purchase in this way than selling his house before making a proper offer; it may even mean John would lose the opportunity to buy his perfect home because his offer wasn’t accepted. Also consider, John is paying for the seller’s time because she isn’t able to swing to her “next branch” until he has an offer on his house.

What if my next house doesn’t close in time? Rarely, if ever, do we see a buyer that isn’t willing to let the seller “rent back” their home after closing for two to three weeks. A daily or weekly rate is agreed upon that covers the buyer’s PITI. The money you save from “swinging” with an offer in hand could pay for improvements on your new home like a hot tub or air conditioning. Let me know what you think.