The Buy, Sell or Rent Dilemma

Low inventory and renewed buyer confidence are setting the tone for the spring real estate market. Both trends bode well for business and the economy but how do these market conditions impact homeowners looking to make a move now?

In real estate, the age-old question is - Do you buy first or sell first? As of late, a third key element has been added to that age old question – Do you rent in between transactions?  Before homeowners can honestly answer these important questions – they need to ask themselves a bigger, more personal question. Do I run from risk or welcome risk? There is no right or wrong answer for today’s buyers and sellers – it simply comes down to what’s right for you.

Risk-aversive clients may need money from their home sale to purchase their next property. These cautious buyers will certainly feel less pressure with one mortgage versus two; but may very well feel under the gun to find their dream home. Sellers who do not find their next home right away – although initially disappointed and anxious – may actually become more attractive buying candidates with cash in hand and a mortgage pre-approval. Often times, executives looking to relocate for career reasons choose to sell before buying, regardless of their propensity for risk. These business professionals want to wrap things up locally before researching their new surroundings, getting input from new colleagues and targeting ideal communities. Renting has been a common practice for executives for many years but with limited inventory and stricter financing, local real estate prospects are more frequently exploring temporary housing solutions when buying and selling timeframes don’t align.

Buyers who do find their new home before selling their current property may have the satisfaction of knowing they found a great new place, but are often be faced with the uncertainty of juggling two mortgage payments. In a hot market like we are seeing now, with buyers outnumbering properties in sought-after neighborhoods, knowledgeable sellers will not consider offers with contingencies; they will simply move onto the next bidder. Conversely, homeowners that buy new homes before selling their current residence may also feel rushed to accept a low offer just so they can keep the process moving.

When it comes to the buying, selling – or even renting dilemma there is no perfect solution or universal rule. Whether it’s a slow market or a vibrant one, the decision to buy, sell or rent is based on timing and one’s finances, personality, goals and tolerance for uncertainty.