Real estate is a risky business. Despite the many professionals serving the industry, such as real estate agents, mortgage lenders, appraisers and home inspectors, all working in various ways to streamline the process and unveil as many issues in advance as possible, there will always be a certain amount of uncertainty. There are simply too many variables involved. From the condition of the house itself to the current state of the neighborhood or locality to the financial stability of the parties entering into the contract, surprises can arise at any time. You just can’t know everything you may want—or even need—to know.
There is, however, one simple way to avoid unnecessary risk: IF YOU ARE SELLING A HOUSE, SELL IT BEFORE BUYING YOUR NEXT ONE!
Could anything be more obvious? Quick, think of one point more likely to find agreement from everyone who has not only worked in the field but engaged in it?
No question, there is a simple, undeniable logic at work here.
What if the real risk is not taking a risk? Is there a danger in playing it too safe?
Let’s consider a common downsizing scenario. You are selling your house and you have your eye on a considerably smaller, less expensive forward property. If you know from the get-go that you need to sell before you can buy then that, as they say, is pretty much that. Stick with conventional wisdom and hope for the best.
But what if you don’t need to sell first? What if you can easily purchase the next house before selling your current one, even carrying both for several months, perhaps even years if necessary? Keep in mind that an affordable, available, and desirable property will almost certainly draw other bidders as well. If you really want it, you may have to be aggressive and pursue it while in the process of selling your house. Hesitation could result in losing out on the purchase property.
The crucial point is understanding the financial risk and knowing your ability to handle it. Can you commit to a purchase even if the sale of your house falls through? What is your comfort level? Be aware of the risk you are taking and whether you can manage it. Only you can know that.
Whether you chose to be bold or cautious, don’t be shy. You have to engage the market, viewing properties, talking to real estate agents, and making offers, to know what is happening in the market. Remember, nothing happens on the sidelines, get in the game!