Video 3-Buying strategy in a seller market
Hello, this is Lei Jiang, a real estate agent in Cleveland Ohio. I am also a licensed real estate attorney with 10 years’ experience. In my real estate business, clients ask me all kind of questions. So the purpose of these videos is to provide guidance and answer your questions.
Right now we are in a seller market in Cleveland and surrounding markets. House inventory on the market is relatively low compares to the demand. Homes are sold quickly. Multiple offers and cash offer are seen often. Market clearly favors buyers with case and are able to close quickly. With this in mind, I will answer an often asked question – in a situation of upgrading or downsizing, should I buy before sell or sell before I buy?
Answer is it depends on your situation. In general, there are 5 ways to do it. 1st is sell your old home, then buy a new home. You may have to move into temporary housing for a few months, But with cash in hand, you are the king in the market.
2nd, sell first but move until you buy a new home. This involves special provisions in the contract. These provisions will allow you to sell your home, and stay there until you find a new home. Downside is that you may receive less offers because most buyer will want to move into their new homes right after the closing. Still, this is a good way avoid moving twice.
3rd, if you can afford to buy a new home without selling the old one. It is great. You may have investment in other markets. In reality, however, very few people can afford to buy the second home with money from other investments.
4th, buy with additional loans, then sell. For example, if you have significant equity and high income, you can get a home equity line of credit, called HELOC, on your old home to cover a down payment for a new home. After you buy the new home, you then sell the old home and payoff the LOC. But lender will carefully check your income and expense. So this approach may not be for everyone.
5th, a very appealing way to buyers, call contingency offer. Basically, you make a “contingent offer” on your new home, contingent on selling your old home. This also allow you to move only once. The downside is that in a seller’s market, such offer will not be considered seriously by sellers. So you need to know the local market.
Bottom line is that you should work with your real estate agent to determine the best approach. If you have relevant questions, please call us. Thank you.