Real Estate Talk:
Buying Before Selling
Purchasing before selling is not a good idea
By Joseph Marovitch
Some buyers shop for homes before selling their current residence. They have not placed their current property on the market but they are prepared to make an offer on another house conditional upon selling their house. These buyers assume, incorrectly, that there house will sell when they want it to. This is almost always a horror story.
A house takes time to sell. There is a process. The house has to be priced and prepared. The property has to be marketed for a period of time so the public becomes aware of it. This period of marketing time generates interest and momentum to get the price where it must be. After 30 to 45 days, if the house is well priced, if the market is stable and growing, if the political conditions are moving in the right direction, if, if, if… then the house will sell quickly. There are a lot of ifs to be satisfied, to sell a house.
This being said, there are only cons for the buyer and seller when buying a house conditional to selling the previous house.
For the seller, accepting an offer conditional upon the buyer selling their house means the seller’s house is tied up. New buyers must be made aware there is a first right of refusal on the seller’s house. Most buyers do not want to provide an offer knowing some other buyer has the right to buy the house first. If the seller receives a second offer that is twice the first offer, the seller will pull their hair out knowing they are losing so much money.
…there are only cons for the buyer and seller when buying a house conditional to selling the previous house.
For the buyer, making an offer with a condition of selling their house means:
1. Their offer must be very good to entice the seller to take the risk.
2. The seller, coming to the realization that no house sells in a day (almost the same probability as being struck by lighting), starts to buckle and lower their asking price.
In the end, the buyer will pay a high premium to have a condition such as selling their house first and lose a lot of money in the process of trying to sell so fast.
There is very little upside to accepting an offer with a condition of selling the buyers house first and very little upside for the seller who has to advertise his house has a first right of refusal.
Do it right:
1. Place your property on the market.
2. Make sure your brokerage contract states you require 30, 60, 120 days or more for possession so you, the seller, has plenty of time to find your next residence.
When your house has an accepted offer, place an offer and buy another.
The only time a promise to purchase with condition of selling the buyers first house is a good idea, is when the buyer’s first home already has an accepted promise to purchase and a short due diligence period. This reduces the risk of the seller. Know, however, that if the buyer is offering a promise to purchase with condition of having to sell their house, they must make the offer high enough to entice the seller.
State of The Market
The GMREB has predicted that Montreal will be receiving the lowest property tax raises in 10 years. They are predicting 5% increases for single-family homes and 4% increase for condos.
Big deal! In the last assessment, the city raised property tax assessment so high, the result was many homes selling below the evaluation.
The city must have discovered a surplus and is trying not to hit property owners as hard, though they are still hitting.
Giant tax hikes to pay city bills, massive road construction all in one summer to drive everyone crazy, a super hospital with not enough beds, a Champlain bridge with too many lights… and the list goes on. Can it be that hard to sit down and make plans that make sense?
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible to, Joseph applies this to his present real estate broker career.
Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or firstname.lastname@example.org