A client of mine is interested in purchasing a 3 bedroom 2 bathroom home. It’s perfect for their needs. By the time they called me, they had their minds already made up.
“Michael, we want to see 452 XXXXXX Street. We love it!”
“Great! I’ll arrange a showing. By the way, have you listed your house?”
“Not yet. We’re waiting to see if we get the one we’re interested in.”
“Mrs. Gxxx, before you get too excited about buying this house, there are some things you’ll want to understand about that market first. Knowing this will help you be sure to get the house of your dreams.”
Her curiosity required I explain that we were currently in “A Buyer’s Market”, and that that meant there are more houses for sale than there are buyer’s interested in buying. I revealed how as in basic economics, supply dwarfs demand. “It means, Mrs. Gxxx, that it can take a long time to sell a house. So, if you need the finances from the sale of your house to purchase a new house, we might find ourselves heartbroken.”
When someone makes an offer on a house, they typically make the offer subject to certain conditions. For example, I might say, “I want to buy your house, but only if I know the furnace works.” Then, once I verify the furnace works, we have a deal. This “only if” statement is known as a subject clause, and it’s a powerful tool in the home buying and selling process.
When someone makes an offer on a house, the less “only if” statements they include will make the offer a lot more interesting to the seller. When, however, someone makes an offer on a house that has excessive “only if” statements, or “only if” statements that area really difficult to satisfy, sellers run away or protect themselves. One way they protect themselves is by placing an “okay, but if x, then y” statement into the offer. Doing this will ensure that the seller misses no opportunity because of the difficult nature of the buyer’s “only if” statement.
If, I explained to my client, we need include in your offer an “only if I sell my house” statement, the seller could feel unhappy with this. Presumably, their Realtor will advise them [it’s what I’d do] that because of the nature of the market, they should include a statement that says, “okay, but if I get another offer, then you have 24 hours to remove all your “only if” statements. While including your “only if” condition might get us an accepted offer, the excitement of that is shadowed by the very real fact that it might be destroyed by another buyer’s offer.
“Interesting,” she said, “I’d never known about that. In a seller’s market it’s different?”
“Yes, quite a bit.”
“In a Seller’s market, there is a higher probability that your house will sell quickly. A good Realtor will know that once listed, your house will likely only remain on the market for a short time. So, the prospect of making an offer with condition that you first sell your house is not as discomforting to the seller of the property you’re interested in.”
After she had thought some about this, I added my opinion that, regardless of the market, it is always best to provide an offer that holds no sale of the home requirement. “To me,” I advised, “making an offer that’s clear of requirements depending on statistics and probabilities is always less risky.”
She said she understood, and told me she’d call me back shortly.
Several minutes later, she called and said she and her husband are in a position that they can make a clean offer on a house—one not subject to the sale of their home. She said too that once they got the house, they would be listing with me. I was overjoyed!
…Anyone want to buy a house?
Whether you buy a home first or sell your home first…
Depends on whether it’s a buyer’s market or a seller’s market.
If a buyer’s market, sell first. There’s no guarantee you’ll be able to sell your home quickly if you find the one you want.
If a seller’s market, list immediately. But, try and buy first. Likely, if you’ve got your ducks in a row, your home will sell fast because of the market.
A Realtor can help you determine whether its a buyer’s or a seller’s market through targeted scientific market research. Find out what the market’s like: Contact me today.