Dear David,
I want to sell my house. I’d like a smaller property in the neighbourhood I’ve lived in for the past 20 years. I’ve been shopping with my agent, and am not finding many options. In this volatile market, should I buy first or sell first? I’m afraid of ending up homeless or owning two houses at the same time. – TREADING CAREFULLY
DEAR TREADING: The decision to downsize is often followed by some level of anxiety about how you’re going to take the next step. I understand your desire to stay in the neighbourhood you love. I’ve lived in my current home for over 20 years, and while it’s not fancy, we find it hard to imagine being anywhere else.
Navigating the current real estate market takes experience and dexterity. We’re in a bit of an unusual spot right now: it’s not a buyers market or a seller’s market, and things aren’t really balanced. Buyers feel like they should be able to steal a property, and sellers are having a hard time letting go of where they could have been had they put their house on the market a few months earlier.
When the real estate market was at its peak, conditional offers were rare. Now that things have cooled off a bit, conditions have made a comeback and provide built-in security measures to make sure you’re not left homeless or owning two homes at once. I’ve spoken at length in previous columns about hedging your bets by buying and selling in parallel, which is easy to do when market conditions are predictable. You can still manage this in a volatile market, but it takes a few more tools from the Realtor toolbox.
First things first: get your home on the market, find a buyer, and ask that buyer to include a “seller purchasing property” clause in their offer. A seller purchasing property clause builds in a window of time for you (the seller) to secure your next property as part of the deal. Depending on how the clause is written, it’s triggered either when the agreement is signed, or when the buyer fulfills their conditions (ie. financial commitments and inspections). Once the clause is triggered and the clock starts ticking, you have a set number of days or weeks to purchase your next home. If you haven’t found a house by the end of the conditional period, you have the option of moving ahead with the firm sale of your home, or releasing the deal and walking away.
No one likes long conditional periods in the real estate world, but conditions give us the means to adapt to a changing market. The seller purchasing property clause gives sellers peace of mind and is the closest thing you’ll find to having your cake and eating it too. It also lets you make good use of your time, since you can shop for another home while waiting for your buyers to fulfill their conditions on your current one.
PRO TIP: Understanding the marketplace and using the full scope of tools a Realtor has at their disposal can minimize risk for buyers and sellers. The right clause and a phone call can pull together a seemingly complex offer, even in these challenging times.
