The paradoxical nature of Real Estate. Feels like a game of Chutes and Ladders doesn’t it? Each roll of the dice holds the potential to move us one step closer to our goal or two steps back. Or even worse: to plunge us completely down a slippery slope into the bottomless pit of debt and despair.
Welcome to the decidedly uncomfortable zone of real estate of mind. The place of contingent listings and contingent offers. The place that asks: How do you sell and buy? Both at the same time? In a difficult market where they are each hard enough to accomplish on their own – without having to worry about the other.
So many questions. So little time. So few column inches…
This week we continue our slow dance with those devils hidden in the details. The ones that migrate to the surface when the average person tries to figure out how to gracefully navigate their way between their present home and their next one.
Let’s start with the most fundamental question: Whaddya do? Sell your current home first or buy a new one first?
The conventional wisdom always was: Sell First – Buy Second. That’s because for most of real estate history there weren’t any other conventional ways to get from here to there. You had to sell first to get your equity and retire the mortgage. Without a downpayment and a clean slate, you couldn’t qualify to buy. Simple as that. The process dictated your path.
But here’s the interesting thing about real estate… there are always edge points cropping up along the razor’s cusp between head and heart. Little pockets of resistance that lie in wait to test our resolve. Odd disconnects that tug on heart strings, push panic buttons, tickle neural pathways of greed and provoke random onslaughts of selective amnesia.
Sometimes human nature says one thing and rational, reasonable thinking about real estate says another. Cognitive dissonance arises. Counter-intuitive voices emanate from the brain. It is always fascinating to watch people try to sync their intellectual and emotional IQs together into a harmonious approach.
If most of us had our druthers, we’d always buy the new house first and sell the old one later. Letting go of “all things familiar” is incredibly hard for human beings to do. We’d rather see the dust settle. Catch our breath. Establish a routine.
It’s our nature to resist change. We don’t like taking leaps over the abyss into an unknown future. It feels incredibly risky to give something up before we get something else. Given the choice we’d rather avoid this kind of risk at all cost.
Enter 2005-2006 – when suddenly all the constraints of the process were removed and we got the choice. Equity lines were available. Easy qual loans didn’t care about our debt ratios. We were free to indulge our fear and avoid doing anything that felt too risky – by blindly choosing to do something else that was way more risky in fact – like buying a house before selling the other one.
Seemed like a good idea at the time….Now that we truly understand the cost and conventional wisdom has been restored to the process, we don’t have the choice anymore. We are back to staring our own human nature right in the face and confronting our fears around change.
Most of us know we’ve gotta sell in order to buy now…so let’s move on next week to effective strategies for doing just that at the same time we find the courage to cross over the abyss between past and future. The market needs more contingent buyers and sellers.