I’m sitting at my desk at noon on Monday, January 3rd, 2011, and I’m trying to identify “new trends” in the real estate market for 2011.

As evidenced by my spoof post from Monday – I can’t exactly predict the future.

But every year in real estate brings about new trends in the market and I’m considering if perhaps 2011 will show us more people who sell their existing properties before they buy…

Monday, January 3rd 2011 was a statutory holiday, but nobody told me that the real estate market was taking another day of vacation.

I have a client who is looking for a property in the $500,000 price range and who has very specific tastes.  She’s looking for a soft loft (she was looking for a hard loft until she realized that 80% of them aren’t modern enough), and she requires 10-foot ceilings, large windows, a decent-sized second bedroom in addition to a spacious master, and some outdoor space where she can comfortably entertain 3-4 friends.

We viewed a property back in December that was exactly what she was looking for, but it was a bit expensive; $569,000 to be exact.

I told her that the price was high, and clearly more than she was ready to spend, so I suggested that we let the listing sit on the market over the holidays and re-visit the idea and the property in January.

We didn’t waste any time.

We were back through the condo on Monday, January 3rd, as the property had been on the market for six full weeks.

She liked the property just as much if not more this time around, and we questioned how to proceed.

I told her that it really comes down to one question: “Has the seller already bought another place?”

If he has, then he must sell his condo because he needs the money to close on the new property.

If he hasn’t, then he doesn’t really need to sell.  And we have no leverage whatsoever.

Unfortunately, that turned out to be the case.  The seller hasn’t bought anywhere else, and thus he’s sticking to his $569,000 price.  I don’t feel it’s worth what they’re asking, so I advised my client to keep looking.

But I spent a good portion of time thinking about the dynamics about this situation and how perhaps this will become the norm in 2011.

BUY first?
SELL first?

What will the majority of people do in 2011?

There are pros and cons to each, and both come with huge pitfalls.

It used to be that 99% of the time, people would buy first.

The process was as follows: You own a property and you’ve outgrown it or desire another location.  You begin your property search and eventually find “the one,” and then once your purchase of that property is firm, you list your existing property for sale.

That’s the approach in a hot market place, or even a luke-warm one.

When the market is strong, there are always buyers ready to purchase your home.  You can take your time searching for your next home and then list your house for sale and sleep warm at night knowing that selling your home is a certainty.  In a red-hot market, you can call all the shots, and simply state “March 1st” as the possession date to line up with the February 27th closing of your new home.

But the one thing you can’t control in this situation is the price you receive for your property when you sell.  If you’ve bought before you’ve sold, then you’re essentially forced to sell your property in the next 60-90 days.  You’d better be damn sure the market is ripe!

A colleague of mine at another brokerage purchased a Lawrence Park home when the market was red-hot for about four weeks in the fall.  He went into multiple offers, bought for $50,000 over asking, and then listed his condo on Davisville Avenue.

He expected to receive multiple offers on his condo, but on “offer night,” he didn’t get anything.  He got one lowball offer, which he was able to turn into something respectable.

He moaned that the market wasn’t fair and he deserved more for his condo, but he had no choice but to sell.  The purchase of his Lawrence Park home was firm, and he didn’t have the luxury of holding out.

If you buy before you sell, you have to accept the value of your property as a snapshot at that point in time.

Now if you sell before you buy, everything changes.

As I alluded to above – the seller of the $569,000 loft hasn’t bought yet so he has the luxury of time.

Now of course, the cynical part of me will shout, “It doesn’t matter how much time he has – nobody is going to pay him that much more than his condo is worth!”  But he doesn’t need to sell, and he likely won’t unless he gets the price he’s looking for.  You could call this an advantage, I suppose, but I find that people who sell before they buy end up “testing” the market and not liking what they find…

As with those who buy before they sell, there is one major pitfall for those that sell before they buy.  Ironically, it also has to do with time.

If you sell before you buy, then you have a finite amount of time to find something to purchase.

Let’s say you sell your property today and it’s closing on April 1st, 2011.  That means that you have to get out there NOW and find something likely in the next 45 days.

A long closing is over 90 days and a short closing is less than a month-and-a-half.

If you sell first, you’d better be damned sure you have a long closing!

Because what if you don’t find anything you like?  What if all through January, you don’t find a single property that you like, and by the end of February, you still haven’t bought?  That means you need to find something in March, purchase it, and close the deal in time to be out of your current property on April 1st.

You could always rent, or sleep on a friend’s couch…

I rarely have a client who wants to sell before he or she buys, but when I do, that person usually has a well mapped out plan.  Either the person is moving out of the city/country, is moving in with somebody else, is going to rent, or is taking possession of a pre-construction condo.  I rarely find somebody who sells first and then frantically scours the city to find something “in due time.”

But as the market changes, so too do the people who transact in it.

There are a lot of sellers out there who feel that they would only move if they were able to sell for “their price.”  Personally, I feel this is a recipe for disaster, and an exercise in futility, but who am I to tell people what to do?

I think we’re going to see a lot more sellers in 2011 who haven’t bought yet, and I think it’s going to lead to more stubbornness than I’ve ever seen before…