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Can You Buy Another Brevard Home?

It's the old "chicken or the egg" story. Every day hundreds of people struggle with the dilemma of what to do first... Sell their home and then buy one, or buy another home and then sell theirs. Each method has its own risks. However, there is usually one option that will work best.

The following story is fictional: Let's take a look at a very traditional couple, Joe and Marcy. They must decide which option to use: Sell their existing home first; or buy a new home first and then sell their existing home. Joe and Marcy knew for some time that they would be selling their home in Viera. They had purchased it just after they were married and now they were outgrowing it. They loved their present neighborhood and wanted to move to a similar area. They had made many improvements to their home. It was decorated in the very best of taste. Everything was in perfect condition, but the home was just too small now that they had two children.

They had their Rockledge Realtor, Nick McGirr, stop by and give them a value on their home. Nick looked through the home and noted all the improvements they had made within the last five years. He estimated the value of the home, and advised Joe and Marcy that it would probably sell within 30-60 days.

Encouraged by this, Joe and Marcy asked Nick to keep an eye out for homes in the Phillips Landing area. Specifically, three or four bedroom homes with fireplaces. Nick began sending them Phillips Landing listings from his computer, and they would visit open houses in the area.

Occasionally Joe and Marcy would schedule a private showing with Nick to see the inside of a home or two. They began to get a real feel for what was available. Over a three- week period, Joe and Marcy saw a number of Phillips Landing homes in Rockledge that they liked. However, they didn't find the perfect home. Perhaps if their home in Viera were already sold, one of the Phillips Landing homes would have been more appealing to them. It would have been much easier for them to make a decision.

At Nick's suggestion, they visited their Lender and obtained a "Preapproval Certificate." Nick explained that this was their approval for a new home loan. This certificate would show a seller that Joe and Marcy were qualified to obtain a loan. It would make any offer more appealing to a seller. Joe and Marcy now knew they could afford to move. However, because they didn't have to move; because there was no urgency, they decided not to put their home up for sale until they found the perfect new home.

Joe and Marcy were worried about selling their home before finding another. They were concerned that since their home was so nice, it would sell quickly... perhaps too quickly. Then they would have to make a fast, or even a rushed, decision on a new home.

They were afraid of having to compromise if there was nothing out there that was just right for them. So they chose to keep looking, instead of listing their home. They visited more open houses and they drove by almost every new listing Nick sent them.

On weekends they drove through Phillips Landing and other similar neighborhoods just to look, see and feel the areas. They always came back to Phillips Landing because it was their favorite area. They liked the schools and its proximity to freeways. It was a reasonable distance to both of their jobs.

Each Tuesday, Thursday and Saturday they received a packet of new listings from Nick that his Multiple Listing Service computer search had turned up. One day, Marcy opened a packet of listings from Nick. Inside were two brand-new Phillips Landing listings. She drove by them, and thought they both had possibilities. Marcy discussed both listings with Joe that evening. They decided to call Nick and arrange to look at the homes Monday evening. That Monday evening their lives changed.

They found the perfect Phillips Landing home. It was gorgeous. Everything that they had hoped for and more. Two fireplaces instead of one, 2 _ baths instead of 1 _, and a master bedroom with huge walk-in closets.

The only problem was the asking price. It seemed to be about 10% higher than other similar homes were selling for in the area. Even allowing for the perfect condition (the setting, the baths and fireplaces), the most they could justify offering was about 5% less than the asking price.

Joe and Marcy had Nick prepare an offer that evening for 5% under the asking price. They felt it was a very reasonable offer. Of course, since their home wasn't even for sale yet, they had to make the Oak Hollow offer "subject to" the sale of their home on Viera. In other words, they wanted the Phillips Landing owner to remove his home from the market until their home on Viera sold.

Joe, Marcy and Nick were convinced that their home on Viera would sell within 60 days. Therefore, they worded their offer to ask the seller of Phillips Landing to hold his home off the market for 60 days. That would give them the necessary time to sell Viera.

According to the "subject to" clause, if their home on Viera did not sell, they would not have to buy Phillips Landing. Everything would work in their favor because they would not lose any money. They had no risk.

The next day Nick presented the offer to the Phillips Landing Realtor, Margie Lomas. He explained to her how perfect Phillips Landing was for Joe and Marcy. He gave her a copy of Joe and Marcy's Preapproval Certificate.

Most importantly, Nick took great pains to share with Margie all the details of Viera -- how perfect it was. He told her they would list the home "right on the money" to make sure it sold fast.

Nick also told Margie that he was convinced Viera would sell in two or three weeks at the most. He said that even though the offer was "subject to" the sale of Viera, there was very little risk to the Phillips Landing owner. Margie seemed very positive about the whole offer. She promised to meet with the Phillips Landing owners that evening. Nick called Joe and Marcy to tell them that he thought things went well, and to keep their fingers crossed.

Margie called Nick back the next morning with bad news. Even though Joe, Marcy and Nick felt strongly that Viera would sell within 30-60 days, the owner of Phillips Landing was afraid of removing his home from the market for any length of time. He wanted some "shouldering of the risk" by Joe and Marcy.

The Phillips Landing owner felt that he was being asked to take all of the risk. If Viera did not sell in 60 days, Joe and Marcy would walk away scot-free. They would loose nothing and it wouldn't cost them a penny.

However, Phillips Landing would be off the market for 60 days of prime selling time. The Phillips Landing owner knew he had one of the nicest homes in the area. He was sure that Phillips Landing would sell within 60 days.

He just couldn't see any benefit to taking it off the market and "hoping" that everything went as planned with Joe and Marcy's home. Also, the Phillips Landing owner further observed that if he accepted Joe and Marcy's "subject to" offer, he couldn't make any definite plans.

He had no way of knowing for sure if Viera would sell, so for 60 days he would be "in limbo." He did not want to be in that position. The Phillips Landing seller had a whole different perspective of the proposal than did Joe and Marcy. He worried about, "What will I do and where will I be if things don't work out?" All Joe and Marcy could see was, "It's a 99% sure thing... just give us a little time and we'll work it out."

Based on his concerns with the proposal, the Phillips Landing owner indicated to his agent that he would consider one of the following options:

Option # 1: He would take Phillips Landing off the market and hold it for 60 days for a non-refundable deposit of $3,000. The $3,000 would apply to the purchase price; but if the sale did not close within 60 days, Joe and Marcy would forfeit their $3,000 to the seller. This type of arrangement would shift some of the risk to Joe and Marcy.

The amount of $3,000 seemed to be a reasonable figure for the seller. This would cover his loss if he held his house off the market for 60 days and then had to start all over.

Option #2: He would agree to sell the home to Joe and Marcy at the price they offered. However, he would reserve the right to keep his house "on the market" and sell it to any other buyer who came along in the meantime. If Joe and Marcy could sell their home before another buyer came along, they could get it.

Option #3: He would agree to hold the home "off the market" for Joe and Marcy for 30 days, but he wanted the full asking price. This would be his compensation for holding the home off the market. Under this option, Joe and Marcy would be under no risk if their home did not sell. However, they would have to pay a higher price to get the home they wanted.

Joe and Marcy talked to Nick about the three options. None of the options were what they had hoped for. Nick explained that the seller of Phillips Landing wanted to know with a strong degree of certainty that if he took his home off the market it would be sold.

The first option would allow him to receive reimbursement in case Joe and Marcy's home did not sell promptly.

With the second option, he could keep the house listed; and he wouldn't lose any time if Joe and Marcy couldn't purchase it. The third option would allow the owner of Phillips Landing to receive the full asking price. In exchange he would keep the home off the market for 30 days. The owner knew Phillips Landing was a beautiful home in a great location. He knew there would be other buyers that would love his home. In other words, he knew Oak Hollow would sell quickly, at a good price. He didn't need to get involved with hoping someone else's home would sell.

"But I don't know if I want to risk $3,000 if my house doesn't sell," said Joe, referring to Option #1. "What if our home doesn't sell within 60 days? Is it worth risking $3,000 to get Phillips Landing?" Joe scratched his head. "And I know I don't want Option #3! As nice as Phillips Landing is, it's not worth the full asking price!"

"But if we don't take Options one or three," observed Marcy, "we're stuck with Option #2 and Phillips Landing will probably sell before we can get our home sold." "Or, we have to pay a high price or risk a substantial deposit to hold it," replied Joe. After considering every side of the issue, Joe and Marcy decided that they just weren't ready to risk $3,000. Nor were they willing to pay the full asking price. So they took Option #2. Nick listed their home on Viera the next day.

Three days later the phone rang. It was Nick. "Phillips Landing sold last night for the same price you had offered. The buyer of Phillips Landing listed their home several weeks ago and it sold last week."

Marcy's heart sank. All along, in the back of her mind, she had known that the odds of them selling Viera before Phillips Landing was sold was an outside chance at best. However, she had already been living in Phillips Landing in her dreams. She imagined the children playing in the huge backyard. She had envisioned cozy evenings, curled up in front of the fireplace reading a book. And the huge master bedroom! "Oh well," she thought, "it's all gone now."

When they had started looking for homes, Marcy hadn't realized that there would be this much stress involved. It was almost enough to just forget the whole thing, but they had put off the decision too long already Viera was just too small. That evening Joe and Marcy talked about what was really important. They called Nick and asked to meet with him the following day.

"Nick, we need to sell Viera," began Joe, "but we just don't know what to do if we can't find anything we really like once it sells. We just don't want to be pressured into buying a home that's not right for us in the short amount of time that we'll have."

"Well, let's take an objective look at where you are," said Nick. "You're not the first clients I've had that have been in this situation. Let's look at what usually happens." Nick continued: "We can list your home for sale with the stipulation that you can remain living there for up to 60 days after the closing of the sale. Most sales close 30-40 days after the offer is accepted. This would give you about 90 days, perhaps longer, to find another home. It's interesting, but the house you will eventually buy is probably not even listed yet. The houses that are listed for sale now, the best buys, will probably be sold by the time your home on Viera is sold," said Nick.

"Why is that?" asked Marcy.
"The good ones sell fast," said Nick. "Most of the nice homes listed at fair prices will probably be sold in 30 days. So, if your home sells six weeks from now, there will be a whole different group of nice Phillips Landing type homes for sale." "But how do we know for sure that there will be a home we really like?" wondered Marcy.

"Well, let's look at it this way," replied Nick, "you've been looking at homes seriously for about three to four weeks. You've seen a number of homes in your price range that you like. You found one that you were in love with." Nick continued, "It's been my experience that when your home sells, you will find the right one. While there is no way I can predict what homes will be for sale, I can predict that there will be a completely different group of homes for sale. One of them will be right for you."

"But what about the prices?" asked Joe. "What if there is nothing that we can afford?" Nick answered, "What I hear you saying is fear of the unknown. It's difficult to make a move without knowing exactly what lies on the other side of the mountain, so to speak. However, there is no way to completely eliminate all risk and still get a good value. As a matter of fact, we haven't talked about the biggest benefit of selling your home first and that's the power of cash negotiation." "You see," Nick continued, "you are already more knowledgeable than most buyers about Phillips Landing type neighborhoods, prices, features and value. You've done your homework and have learned that market. You're experts. In fact, I'd say you know the Phillips Landing market better than 90% of all real estate agents."

"I'll continue sending you information about Phillips Landing homes until your home is sold. You'll become even sharper about the market. When your home sells, you'll be one step ahead of the great majority of buyers out there. You will have a tremendous edge. Remember, you're not the only family looking for a well-priced, nice home in the Phillips Landing area. When an attractive, well-priced home is listed, you'll be one of many who want it. Since you've done your homework, you'll be able to move more quickly and 'pick the plum' before anyone else gets it."

"What's more is that with your home sold, we'll be negotiating from a position of strength. Any offer you make will be very seriously considered, because it's like cash. Your home will be sold, so there will be little risk for the seller to deal with because you're already preapproved for a new loan. I'll be able to bargain on your behalf even more effectively with a seller. I've helped many buyers get really good deals using these techniques."

Joe and Marcy decided to take Nick's advice. Four weeks later their home was sold. Nick began updating Joe and Marcy daily with all the new listings on the Multiple Listing Service computer.

When a new listing would come through, Joe and Marcy knew about it the day it was on the computers. They were often the first people through the new listings. They kept meticulous notes about values and features. They had notebooks full of notes. Two weeks later Nick called with the news that another Phillips Landing home was listed for sale. The home very closely matched Joe and Marcy's specifications. The price seemed to be right on the money.

Nick faxed the Multiple Listing Service sheet to Marcy at her office. On her way home from work that night, Marcy drove by the new listing. It was gorgeous on the outside. She called Nick and Joe from her car.
Three hours later, Nick finished writing the offer. Joe and Marcy had decided to make an offer of 5% below the asking price. They were prepared to pay at least $2,000 more than their offer because the home was perfect.

The next morning, Nick called with good news. Their offer had been accepted as written. They got the house for $2,000 less than they would have paid! By selling their home first, Joe and Marcy put themselves in a stronger position when it came to making a purchase. They could negotiate better, because there was very little risk involved for the seller.

Joe and Marcy put themselves in a position where it was very easy for a seller to accept their offer and ended up with the home of their dreams.

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