Step 2: Selling AND Buying - Oh My!
Selling AND Buying - Oh My!
Selling your old home and buying a new one at the same time is a balancing act and gets pretty exciting toward the settlement date. BUT, it can be done and IS being done daily. Below are some great options for you to think over to decide which ones will work best for you. Notice the word options is plural. There definitely could be more than one and you may adjust your choices based on the offer you receive on the home you are selling or buying.
If you are able to buy without selling, you definitely have more bargaining power and less stress on finding the right home. If you do need to sell in order to have your down payment or qualify for a new mortgage, there are some strategies to give you more bargaining power and help give the sellers of the property you want confidence in your ability and determination to see the purchase through.
Think about this process from the seller standpoint for a moment. With the home you are planning to sell, how comfortable are you accepting an offer contingent on the buyer’s home selling? What would you need to see in that offer to make you confident that the reward of choosing them outweighs the risk? We will keep the answers to those questions in mind when we write your offer on the home you want to purchase.
So, on with some possible paths to buy and sell simultaneously!
Know what excites the seller!
We briefly just touched on this above—what is going through a sellers mind when an offer comes in contingent on the buyer’s home selling? Some of the answers are: cancellation risk; seriousness of buyers; is their home on the market yet or pending; Is that contract contingent on a home selling; How close is it to selling; deadlines and dates. The best way to start tackling these concerns is for me, your agent, to call and have a deep discussion with the selling agent on what is most important to the seller. Simple start, but vital. Maybe they need a few extra days for them to be able to find a house and move or price and bottom line or a speedy closing. We won’t know until we ask.
Get a bridge loan
A bridge loan is another option for helping you deal with the financial strain of buying a new house before you sell your old one. Bridge loans are short-term loans that allow you to pay off the mortgage on your own home so you don't have to carry that cost. Then, when your home sells, you'd use the proceeds from the sale to pay off the bridge loans. Your credit must be immaculate to qualify for this, you must have equity in the home you are selling, and understand that the interest rate will be higher than a regular mortgage rate. It can be a useful tool.
Sell after you buy
Holding two properties at the same time will undoubtedly be a stretch financially. However, if you can afford to do so, it's also the safest option. This option allows you to submit offers on new homes without having to worry about using a home sale contingency or taking out a new loan. A strategy to ease the financial burden is to get your home on the market as soon as possible after finding and/or buying your next home and price it to sell within a month. On the home you are purchasing, strategically have it close the first week of the month so you have more than 7 weeks until your first payment is due. This gives you time to prep the home you are going into as well as move while selling.
What about selling before buying?
Selling your old home before you buy a new one is a more financially secure option and empowering at the negotiation table. You’ll know exactly how much money you have to spend on a new property and access to it. Naturally, this method is not without its inconveniences, as well. For instance, you may have to deal with the stress of moving twice within a short period of time or the home you are buying does not appraise and negotiations fail. It sounds scary, right? But there are two things to keep in mind. In the long run, when you get into the right home at the right price, will the inconvenience of moving twice be remembered strongly? If it saves you $5,000 to $10,000 on the price, is it still important? Perspective is important and the answer to these questions will not be the same for everyone. They are specific to you and your situation.
Our settlement deadline and possession dates can make things easier
The easiest way to avoid the hassle of moving twice is to use the settlement date to your advantage. We can work on negotiating the settlement date on your new home fall on the same day as the closing on your old one AND a) have the possession date for the home you are selling be 1 to 3 weeks out which gives you time to close and move b) have the possession date for the home you are buying be within 24 hrs of closing giving you access to the home to prep it and get moved into. That way, you can move directly from one home to the other without pausing in between.
Here, it's important to remember that an offer is one of the points of negotiation. If having matching settlement dates and special possession dates is important to you, you will likely need to be flexible with other areas of the contract to keep it attractive to the other party. This could be in price, repairs, home warranty or various other points.
Renting it back
Another possible option is to offer an earlier settlement deadline and a rent-back contingency (meaning you will accept their offer to buy your home if they will let you rent it back for a period of time. Many buyers, of course need to move fairly soon, but in a tight market with fewer homes available, you may be able to negotiate a month or two of renting it back. Keep in mind, however, that in this scenario, you're essentially asking your buyer for a favor. They don't have to agree to rent the home back to you. After all, they may be organizing a buying-and-selling plan of their own. But it never hurts to ask.
You have Options AND Hope
Reading through the possibilities above shows you that with forethought, we can make your move possible and reduce risks and stress. We will discuss all of these together and how they fit into the current local real estate market. There may even be a few new possibilities that come up between now and then.
Blog Archive2019-01-10 10:53:16
Step 6: Marketing has Started!
Step 4: Pre-Market Inspection. Yay or Nay?
Step 5: Prepping for Photos
Step 3: Declutter, Deep Clean & Stage for Buyers
Step 2: Selling AND Buying - Oh My!
Step 1: Hiring a Realtor & Expectations
Step 9: Showings & Open Houses
Step 7: It's Live on the Utah MLS! Where else?