- The Washington Times - Friday, June 2, 2000

In this hot seller's market, is it a good idea to sell your home before purchasing another? Should you take the money and run, or is it better to wait until finding the home you want?

Audrey Jones, a Realtor with RE/MAX Affiliates in Alexandria, says sell.

"This is the opportunity to sell your home right now in this market. You will get top dollar." Ms. Jones intends to sell her own town house and is considering buying a condominium that she will move into when she sells the town house.

In a bad market, she says, her two-bedroom, 3,000-square-foot luxury town house in Kingstowne, south of Alexandria, might not move. Sales in her subdivision now are ranging between $305,000 to $310,000, which reflect a marked appreciation since she purchased her home three years ago.

There is a caveat to this advice, however. "The danger is, where do you go if you stay in the area, because you would have to pay more," she says. Ms. Jones says selling depends on the individual's needs: "If you want to buy up, you should sell in this hot market."

She suggests that the seller should have some plans for housing, and should even consider renting for a while. In the Alexandria area, Ms. Jones says, a house is on the market for an average of five days.

Holly Worthington, managing broker of Long & Foster's Chevy Chase/Woodley Park office concurs.

"You pretty much have to sell your house first. Because it's such a seller's market, the seller can ask the buyer to wait until they find the home of their choice," she says. "The buyers will be forced to agree to almost any terms."

Sellers get their way

Sellers in a recent negotiation asked the buyers for two months of free rent in the house and no security deposit. Those buyers walked away, she says, but she has seen buyers offering free rent-back in their offer to purchase.

"That's the first time I have seen a seller request [rent-back]," she says. "The rent-back issue has become a popular bone of contention in a bidding situation. I don't see how in this market anyone would have any choice but to sell their own house first."

Ms. Worthington says in a lopsided market, rash decisions are made. "Everyone has to make decisions quickly without time to get well informed," she says. Some people have had to buy without actually seeing the property, and buyers are writing four to five offers before one is accepted, she says.

"In my office, close to 30 [percent] to 35 percent of listings get multiple offers," Ms. Worthington says. Mondays are now known as "multiple Mondays," she says because some properties get as many as eight to 10 offers.

A house in American University Park listed for $299,000 sold recently for $387,000, she says. "An average bidding situation bids the price up 10 percent, sometimes 20 percent," she says. However, she says, "I think it [the market] is beginning to shift."

Mary Lou Shannon of Long & Foster's Bethesda/Potomac office says two of her buyers are selling their homes and moving into apartments just to be in a stronger financial position when making an offer. One of the couples is having a baby next month, and the other couple has a 3-month old baby.

"It isn't necessary to take that action in all areas and for all people," she says. "I do not recommend that people put their house on the market unless they have a place to go," she adds.

But her experience as a listing agent is that buyers are writing offers with no sale-of-house contingency and are doing a lot of preparation for mortgage documentation.

"When there are a number of offers, the seller compares the financial feasibility. There will be one or more people that are well-positioned financially. If a seller doesn't have to take an offer with a financial contingency, he will take that," she says.

She agrees with Ms. Worthington that this market is too difficult for buyers and hopes it will slow down a bit.

Another approach

Debbie Miller of McEnearney Associates in Arlington takes a different approach.

"There are two ways of looking at it," she says. "If you find a house and love it, you can try getting a bridge loan." Another option is to put the house on the market and delay settlement to coincide with the purchase of the new property, Ms. Miller says. You also can make the sale of your house contingent on finding a new house. "If it was me, I would sell mine and get a delayed settlement, and then if I couldn't find anything, I would just rent," she says. However, once you become a buyer, "You can't have any contingency on a home sale," she says.

Ms. Miller says the market is slowing down, and the pendulum is swinging away from the seller's market back toward the middle because of the state of the economy and the Federal Reserve Board's interest rate increases. Also, she says, a lot of buyers refuse to get into a "bidding war."

"Buyers are not going to put up with this too much longer," she says.

"I had a house that had lots of people through, but people said they knew there is going to be a bidding war, and [they] can't take it," she says. "Several months ago, I listed a house at the top of the market and got eight offers, and it sold for $41,000 over the listing price."

If you are buying up, the higher-priced homes tend to stay on the market longer, so you have more flexibility, Ms. Miller says. She offers this advice for buyers:

• Get approved for a mortgage.

• Know your buying power.

• Have a game plan and go for it.

Ms. Miller says a house in tiptop condition will sell quickly and get multiple offers in a close-in location such as Arlington, where builders are buying up old houses, tearing them down and building expensive, upscale homes.

Contract contingencies

"If the buyer wants to purchase new, they need to find out the delivery time and that will determine when they put their house on the market," says Pat Lawless of Long & Foster's Centreville office. She says a lot of builders are not delivering until the middle of next year.

If the seller is going to buy a resale, she says, have your agent make inquiries and then put the house on the market. "We have a lot of sellers renting back for two to three months," Ms. Lawless says.

She recommends putting a "choice of house" contingency in the contract, which says the contract is contingent upon the seller finding their choice of house.

"In today's hot market, most sellers are selling now," says Sal Caruso, a broker with RE/MAX Distinctive Real Estate in McLean.

He is working with a buyer who has found a house but still has to sell his house in McLean. The seller will not accept the contract with the choice-of-house contingency, he says, fearing other agents will not show a property with a contract on it. Mr. Caruso even asked for a kick-out clause, which would push a contract without a contingency ahead of the contract with a contingency, but the seller also refused that option.

"The buyers today are really in a pickle if they have to sell a house," Mr. Caruso says.

He listed the buyer's house and went back to the seller, who still said no. "My buyer really wants that house," he says.

The best way to protect yourself when selling your house, says Mr. Caruso, is to put into the contract that the sale is contingent upon the seller's finding a house of choice. However, Mr. Caruso says this also has a downside as some agents will not show a house with this contingency.

Mr. Caruso advises sellers to have an idea of where they want to buy their next home.

"You can program a particular buyer's requirements and get an update every day," he says. And, he says, there should be no contingencies in the buyer's contract other than a home inspection no contingency for selling a house or getting a loan will be accepted by sellers today.

He offers this advice for sellers:

• Get a loan commitment letter.

• Put your house on the market with a choice-of-house contingency.

• Preferably have a contract on your house.

• Act quickly when you find what you want.

• Try to delay settlement to coincide with purchase of the next house.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide