Real Estate Q&A – Buying and Selling at the Same Time
Questions – I want to move, but I need to sell my home before I can afford to buy a new one. I’ve heard the market is competitive. What should I do, and where should I start?
Moving your life and family is a big deal and takes a lot of coordination and timing. If you are considering a transition, we suggest meeting with an experienced real estate professional early on in the process to get a strategy in place. In the current market, properties are moving quickly, and it is very competitive. With high demand and low inventory, it’s safe to assume that, in most cases, your property will sell fast. But it’s the purchase side of things that can present a few more challenges.
Although it’s tempting to start looking for a new home first with the goal of submitting an offer contingent upon the sale of your current home, here is the hard truth — if you have a home sale contingency in your offer, you are going to have a very hard tough time securing a home in this market. When a seller can choose between 5, 10, or in some cases 20+ offers, they will look at every term of the Offers they receive, and this contingency will rule out yours out of the mix almost every time.
Here are some of the suggestions that we provide to people for their transition:
Talk with your Lender.
Do you really need to sell your house before you can buy a new one? Now hear me out — I realize that in an ideal world, you would sell before you buy. But maybe (just maybe) you can swing the opposite? Take a hard look at your finances and speak with a lender to see if this may be possible for you. If you don’t have enough cash for a downpayment, discuss the option of pulling money out of your current home (depending on the amount of equity you have) to apply towards the down payment of a new house. This can be accomplished through a HELOC and can help you bridge the gap with upfront funds for the purchase that you would pay off when your old home sells. Talk with your real estate agent first to get an idea of how quickly homes in your area are selling. You want to feel confident that when the time comes to list your home, you know how long to expect for it to sell. Price your home correctly so you can generate good interest and ensure a quick sale. In our current market, properties are selling so quickly that many times you can still align your two closings very well. If not the same day, usually within a few weeks of one another.
List your home for sale first.
If you genuinely need to sell your home first, we suggest listing your property for sale as your starting point. It might seem like this is “putting the cart before the horse,” but once you have your home under contract, you will be more competitive in your purchase. Since sellers often have a lot of leverage in this market, you may also be able to negotiate a post-closing occupancy (basically a rent back from the buyer) while you continue searching for a home. Ideally, a quick closing with a more extended post-closing occupancy will allow you to remove that home sale contingency as quickly as possible to be as competitive as you can in you purchase. The downside of this is that if you can’t find another property to buy, you may need to find another “in the meantime” living situation: an apartment or bunking with family/friends. Although nobody likes to move twice, you will have a lot more power on the purchasing side once you sell your home.
Consider your price point.
At what price point are you selling, and at what price point are you purchasing? If you are upgrading your home, consider how competitive the pricepoint that you are moving into is. Although we tend to see a lot of competition in some of the lower price points in our area that draw a wider net of buyers, higher price points may not be as competitive. If you are transitioning to a higher price point with less competition, a seller may be more likely to entertain an offer subject to a home sale.
I know it can all seem pretty daunting, but remember, It’s our job to help you figure out the best way to put all of these pieces together. We are always game for meeting to discuss the best strategy to help you get to where you want to be! Contact us today to get in touch for a no-obligation consultation.