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Selling One, Buying Another
In a perfect world, you sell your old home and buy the new one on the same day. With proper planning and if Realty3 represents your interests in both transactions - it is very likely this can happen. There are times, however, when it is just not possible for a host of reasons that are sometime out of your control and out of ours. Given that things don't always turn out perfectly, here are some things to keep in mind as you negotiate the sale of one house with the purchase of another.
Time it right
Fall and spring are the best times for homes to move and you want to consider the season of the year when buying and selling. And if the closing dates aren’t going to coincide, a gap – rather than two mortgages – is the better. It’s easier and usually cheaper to find temporary housing than juggle two mortgages.
Selling First
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If it is a buyer's market - this is the only way to go since it will probably be harder to sell than it is to buy considering the higher amount of inventory availble for sale and more competing properties vying for the same smaller pool of buyers.
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If it's a seller's market - it is also the best way to go since there are lots of buyers who have no property to sell and you would be bidding on a replacement property against them.
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Selling your home before buying a new one minimizes financial hazards. Even if you have to find temporary housing, it’s generally cheaper than two mortgages.
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Listen to our professional pricing advice! That way you’ll have a good idea how the sale of your home will effect your purchasing power on the new one. This will help keep you from over extending your mortgage abilities.
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Get pre-approved on a loan for the new home. This is not an option, it is a necessity.
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Once most of your contingencies have been met - the buyer's financing and home inspection - look at suitable replacement properties but wait to put an offer on a new house. You don’t want to be left holding the bag, or in this case, the house.
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If you’re ready to accept an offer on your home, but haven’t found the right new home, negotiate a longer closing or in some circumstances, a sale/lease back. This will give you more time to look for the new home. Worse case scenario, you may have to look for temporary housing.
Buying First
It happens. You’re only thinking of buying, and suddenly the right home shows up. Now you have to sell your old home quickly. Here are some tips on making things work in your favor:
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Negotiating a long closing date on this side of the sale works, too. You can also make the purchase contingent on your house selling - not a great strategy in a seller's market but more acceptable in a buyer's market. You never know what may also work best for the seller of your new home.
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Try and schedule the closing date of your current home on the same day of your purchase. If that can't work then the second option is to schedule the closing of your current property prior to the closing on your new home. Temporary housing is generally a better situation than two mortgages and if it's only for a few days or a week, a hotel would be financially viable as an option.
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Listen to our pricing advice and make sure it’s realistic in the current market.
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When you get an acceptable offer, we will secure a letter of financial qualification from the buyer's lender. You don’t want any surprises that are going to delay things.
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If you’ve closed on the new home, but haven’t sold the old one, consider renting it out, or taking it off the market until the next season (or until the market improves). We can help you review all of your options, choices and ramifications so that you can make an educated decision.
Same Market or Across Country
Generally, if you’re buying and selling in the same market, we can negotiate closing dates to work for you. But when you’re dealing with a cross country move, it’s a lot harder. Our Realty3 Relocation Department deals with this every day! A real estate professional is critical to managing all of the details for you and coordinating every facet of the move. Legal documents can be email, faxed or sent via overnight courier and your focus won’t be stretched to the limit. You may end up renting one home or the other, or have to consider a bridge loan. But with our Realty3 Relocation Department on your side it will hopefully be less stressful.
Show Me the Money
Make sure you have a tight hold on, and a clear understanding of, your financial situation. Cash reserves are always helpful, but never more so than during the purchase of a home. Two to three months is the recommended reserve, but if you don’t have it, this is where the bridge loan comes in handy. Some lenders are more inclined to make a loan if it’s for the purchase of a home. If you’re a smart shopper/seller, you’ll accept an offer from someone who’s flexible about move-in dates. It can save you money in the long run. Too many moves with storage costs can quickly eat up any profit you may have made in the transaction.
Realty3 is here to help you ! Whether you are moving in state, across the country or around the world - we do have the power and experience to move you!
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