In a perfect world, you sell your old home and buy the new one on the same day. Given that things rarely turn out that way, here are some things to keep in mind as you negotiate the sale of one house with the purchase of another.
Timing is Everything
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 are not going to coincide, a gap – rather than two mortgages – is the better choice. It is easier and usually cheaper to find temporary housing than juggling two mortgages.
Selling your home before buying a new one minimizes financial hazards. Even if you have to find temporary housing, it is generally cheaper than two mortgages.
Get an appraisal. That way you will have a good idea how the sale of your home will affect your purchasing power on the new one. This will help keep you from over extending your mortgage abilities.
Get pre-approved on a loan for the new home.
Until most of your contingencies have been met, it is better to wait to put an offer on a new house. You do not want to be left holding the bag, or in this case, the house.
If you are ready to accept an offer on your home, but have not found the right new home, have a frank discussion with your real estate professional, and have them negotiate on your behalf based on what is in your best interests. This will give you more time to look for the new home. Otherwise, look for temporary housing.
It happens. You are 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:
Negotiating a long escrow on this side of the sale works, too, if possible. You can also make the purchase contingent on your house selling. This will work better in a slow market, but it is worth a try in any market. You never know what may also work best for the seller of your new home.
Try and schedule the closing date of your current home prior to the closing on your new home. Remember, temporary housing is a better situation than two mortgages.
Take a close look at what price you are going to ask for your home. Make sure it is realistic in the current market. Count on your real estate professional to provide an accurate price opinion on which you can base your sales price.
When you get an acceptable offer, check the buyers’ approval letter. You do not want any surprises that are going to delay things. If you have closed on the new home, but have not sold the old one, consider renting it out, or taking it off the market until the next season (or until the market improves).
Same Market or Across Country
Generally, if you are buying and selling in the same market, you can negotiate closing dates to work for you. But when you are dealing with a cross country move, it is a lot harder. A real estate professional really comes in handy at this point. Legal documents can be 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 someone local in the market 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 do not have it, this is where a bridge loan might come in handy. Some lenders are more inclined to make a loan if it is for the purchase of a home.
If you are a smart shopper/seller, you will accept an offer from someone who is 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.
Selling one home and buying another can be a doubly complicated, and emotionally challenging experience if you do not have the right Real Estate Advisors | REALTORS® representing you. If you choose us, to represent you, we will assign two experienced Martin Real Estate Advisor REALTORS® to assist you, eliminating any risk of conflicts of interest, and ensuring you get the support and guidance you require.
Call us today at 469-262-5411 of just complete the GET IN TOUCH form on this page, and let us know you are buying and selling, and we will get back to you as soon as possible.