Bonus Week – Love Selling Your Home Series
When you sell your home, you most likely will need to find a home to move into as well! That’s why this bonus article is a must-read in the series, Love Selling Your Home: Minimize Your Stress, Maximize Your Profit. It’s a step-by-step walk through the entire home-selling process, and here’s how you can love selling and buying at the same time!
You’re ready to trade up to a new home, and that means you’re about to face the homeowner’s dilemma of what to do first:
- SELL your current home first and use the proceeds to buy a new home.
or
- BUY your new home first and hope your current home sells in a timely manner.
It’s a tricky dilemma since you don’t want to end up with two mortgages for too long and you also don’t want to sell without having a place to go next either!
Here’s how to avoid that Catch-22:
Get Ready and Plan Ahead
Timing is everything. You want to put yourself in the best possible position no matter what, so start with some major pre-planning no matter what option you choose. I tell my clients—when you’re buying and selling at the same time, reach out to me a few months and even a year before you are ready to move!
- Get your home ready to sell. Tackle some home improvement projects so your home looks welcoming to prospective buyers. Get this done beforehand even if you plan to buy first so you can move quickly to list your current home on the market.
- Scope out your current home’s competition. Take a look at homes you’ll be competing with to determine market conditions in order to set a competitive price. You may decide to wait a bit if the market is slow, or maybe your home can be priced more aggressively.
- Get pre-approved for a mortgage. You MUST do this first no matter what. You’ll know how much you can afford and will be able to move forward on buying a new home if your current one sells quickly. And, sellers will view you more favorably and may take a lower offer than another that’s contingent on financing.
- Examine financing options. Consider a bridge loan, a short-term loan that “bridges” the gap between buying your new home and selling your current one. Especially in a competitive market, this is a great way to look strong in your offer for your new home.
- Be an efficient and smart “shopper.” Don’t waste time looking at homes you can’t afford or don’t meet your requirements. Narrow down your search to those that you would seriously consider buying. Unless you plan to be in the “thinking” about moving stage and just want to see your options, then go ahead take your time. However, if you’re serious about moving on, then you need to be strategic and be well prepared as both a seller and buyer.
- Add contingency clauses. Review the pros and cons of contingency clauses and how they fly in the current market. You can agree to sell your current home contingent on purchasing your new one and/or agree to buy your new home contingent on selling your current home. Be aware though, most sellers and buyers like contingent-free offers!
Sell Before You Buy
Even when buying and selling at the same time, one or the other has to first, even if it’s only for a day or two.
Let’s explore the pros and cons of putting your home on the market first.
Pros:
- You won’t be at a disadvantage at the negotiating table, feeling pressured to accept an offer that is below-market value because you have to meet a purchase deadline.
- Once your home is sold, you can buy your next one with no strings attached, basically no contingencies.
- You will have equity immediately available to use for the purchase of a new home.
- You know exactly how much money you have to put into your next home. No guessing as to what your final price will be for your current home.
Cons:
- You may need to find interim housing – either renting back your old home or finding a place to stay between homes.
- You have more pressure to buy and it might lead to rash decisions when looking for a new home.
- Since you haven’t moved yet, you’d have to live at your home while prepping it for sale and while it’s on the market with people coming to see it, keeping it clean all the time, etc.
Buy Before You Sell
Especially when the market favors sellers and buying is competitive, it can make the most sense to first buy before selling. How this works, is you prep your home so it’s ready to go on the market quickly after you find your next home. If you are thinking of going this route, it’s really important to make sure you are approved to do so.
Pros:
- You can search for a new home without any pressure.
- No need to find interim housing.
- You could even move out of your current home before it’s on the market. This is especially helpful for people who have kids and pets at home and don’t want to be bothered with showings interrupting their day-to-day life.
Cons:
- You run the risk of having double mortgage payments. Plus, not everyone can get approved for another mortgage while still owning a home.There are, however, great loan programs out there that can make this easier on the finances.
- You don’t know the exact price your current home will sell for, therefore not knowing the exact amount of funds you can put towards your new home.
Communicate and Coordinate
Whatever option you do first, you still need to coordinate two major transactions in a short period of time. Don’t feel like you need to figure all this out on your own. That’s what I’m here for!
Reach out to me well before you want to move so we can talk through the options and what the best path forward is for YOU. The best way to go about this for you might not be the same way your friend, neighbor or coworker has done it. I’ll focus on you, your goals and your financial situation to create a solid plan that will get you from where you are to where you want to go next! I’m looking forward to helping you or anyone you know buy and sell with ease.