Buying & Selling at the same time? EEK!
Running out of space and dreaming of your forever home? Maybe your home is TOO big?
Moving into a bigger better home but need to sell first? OR are you wandering around a home that's simply too big and too expensive to keep? You aren't alone! This year many will make the move from their current home to their forever home.
Buying & Selling at the same time without tears, headaches or heartache is easy IF you plan ahead.
When you are ready I'll be here to help you as I have many families over the years. I manage this type of sale all the time - literally I'm working on contingent sales like this every day. Helping the Lyons family go from the little house on Lincoln to the big house on Abbott, helping the Jones family go from the beautiful library area cape to the the mansion on the hill. Finding strategies for the Worthley's to sell on Chickering to get out country on Salem Street or the Peters on Boscawan to find their forever home or the Schumachers, Chase's.... It all starts with a strong strategy.
When at all possible, Sell before you Buy. This is the easiest way to know exactly when your closing date is taking place, how much you will have for your down payment. If that’s not an option for you then be sure to read all of my tips below.
Do you have to sell to buy?
There are 3 types of contingencies that I suggest for your protection.
A suitable housing contingency allows you to market your home, select a buyer and then gives you a period of time to find another or you are able to terminate the sale. Be warned - this does limit the amount of buyers who will consider you seriously selling but for those who aren't in a rush you could be their best choice.
A financing contingency - One of my favorite local Attorney Ej Schneider of Dalton and Finegold in Andover opened my eyes to the home sale/home purchase financing contingency. This clause indicates if you don't obtain financing on your purchase you no longer need to sell. I love it and think it's a great layer of added protection.
A home sale contingency allows you to submit an offer on another house however if your house doesn't close then you are not bound to buying the new house. This is a tricky one for many to understand. Over the last decade I have had great success with this - contact me with questions as there are dates, deadlines and strategies that make this more attractive.
Often my clients will have a suitable housing contingency at the beginning and then a home sale contingency at the end so they are protected every step of the way.
BONUS TIP - When at all possible, list your house BEFORE submitting your offer, even if it’s same day, BEFORE is better than after offer submission. It shows sincerity. To protect your self utilize the suitable housing & home sale contingency.
Don’t need to sell to buy?
Talk to your favorite trusted lender and ask them to check your qualification status to see whether you can Buy and then Sell. If you need a lender you will love? Ask me for suggestions.
Should you rent it? If you own existing property and can buy your next home without selling, consider whether your home makes sense to rent profitably. A local agent can share what the norm is for rental pricing, terms and management costs.
Have Savings? The easiest route is to use an existing savings account for your down payment. Often people borrow against a 401K or retirement account, we even see people borrow from parents and repay them at closing. This allows you to sell your existing home after you have moved out minimizing the stress, strain and anxiety. You can take time to clean, freshen up paint, complete any work that would enhance the value and sell for a stronger price. Also, virtual staging can dramatically modernize a home and attract more buyers. When I have a vacant listing I frequently utilize this type of preparation for my clients
Have Equity? A home equity line of credit may allow you to access money for your down payment, then pay it off when your home sells assuming you are qualified by a lender to do so. Need a great lender? I will make some suggestions for you.
some of my secrets for doing it all at once….
How to handle the flow of both transactions when they *HAVE* To happen same day.
1. How much is your house worth? It's crucial to have an accurate idea of how much your house is worth AND how much the selling costs are. My average listing will sell for at least 101.4% of my suggested list price. This means when I provide a price for you to use as a guide we can expect at least that and potentially more, depending on timing and structure.
When your agent comes to determine the value have them give you their list of things to do so you can start preparing. Better to be ready and not have a house to buy yet than fall in love with a house and need to empty a garage, paint a dining room and clean out a basement to attract the best buyer.
2. Obtain your Pre Approval!…"But I don't want to get approved until I find a house". The worst thing you can be when you go house hunting is unprepared. Going into an offer with a home sale contingency without a pre approval guarantees you will have to overpay to even be considered. You need your pre approval so that when we are negotiating a $500,000 house and the seller says $510,000 you'll know how much that will truly cost you per month. It could be a few dollars or it could be a few hundred. You won't know without your pre approval. Sellers will not take you seriously without a valid, recently dated pre approval. When possible have your lender take it a step further and obtain your pre commitment, a stronger version of an approval showing the seller of the home you are interested in that you are very well qualified and almost through the process.
3. House hunting here we come. So by now we know how much you'll spend to sell your house, we know how much to expect to earn of a sales price and now it's time to start the search. We need to take a close look at what you need from your next house, how much space, what type of neighborhood, do you need a 2 car garage or is a 3 a must? Is a pool important? How about walkability? Now is the time to look closely at what the available houses offer you and determine whether it's enough to make you move. Once we have options we need to research whether that seller has to sell to buy, whether they have a house or whether they have moved already. The key with the buy and sell shuffle is to find a seller that is comfortable with a flexible close date as they will need to know the final date may need to be adjusted. Often you can find the perfect neighborhood in the right town but the house might need cosmetics, these seller's are usually the most willing to work with a contingent offer.That's where my team of contractors , interior designers and architects comes in. We can help you figure out if it makes sense to pursue or to keep searching.
4. Get a pen. This is a deal making list you'll want to remember when house hunting. Once you see there are options that make it worth the move it's time to hit the market. Over the years I have learned how to compete with non home sale contingent offers without overpaying. You'll need a lender letter, a listing agent letter, and an accurate market strategy - this will include a timeline of how long til you can hit the market, how long we plan for it to take your house to sell, what the average days on market is in town and what range you can list for with a back up plan of what happens if a price drop is needed. All of this goes with with your offer to show that you have a strong, serious strategy.
Then it's time for the love letter from you to them outlining how diligently you will work to get your house sold on time and then a comfortable deposit. Often Ill include my resume so that the seller can see I have a proven track record of around 500 successful sales. Letting them know my typical house in 3 days will receive multiple offers always helps and pointing out I am ranked in the top 3% of all agents nationally for years gives them a level of comfort knowing my clients have a strong agent with a smart plan. If you are buying and selling at the same time in any town you need someone with experience. Ask me for some recommendations for your area.
5. It's all about the money - don't make the crazy mistake of going into a home sale contingent offer in a Seller's market looking for a deep discount unless the list price is far off of true value. Enhance your strength by skipping the typical deposit of $1000.00 with offer and about 3% to 5% with the purchase and sale contract and make yourself stand out. Make these deposits as large as you can comfortably & safely as they are a part of your mortgage down payment and closing costs. I would consider $1500 with offer and maybe 6 or 7% with purchase and sale. Note - be absolutely sure to have the protective contingencies including inspection, mortgage and home sale so that you are owed a refund if any issues come up. This can go a long way to making you stand out as a strong buyer.
6. THEY SAID YES! So you took my advice and the seller took you seriously - now it's time to sell your house. Take that strategy that you worked with your agent to create at the beginning of the process and put it to work immediately if you haven't already. Post a date that you'll be reviewing offers on and be absolutely sure your MLS listing and seller's statements show you have a suitable housing contingency if you are choosing to work with one. Keep in mind the offer you choose to accept needs to have this language as well. It's best to have it reviewed prior to signing for your protection. Keep in mind you'll need to notify the seller of the home you are buying right away of any changes in timing and get the changes in writing in the form of a written addendum for your protection. Don't remove the contingencies from your purchase offer until after your house closes for your protection. From here to the actual closing many things like inspections and appraisals take place. Be sure to watch the deadlines for your protection. It's smart to have your mortgage contingency due after your buyer's mortgage contingency.
7. It's time to move. You made it to the finish line! About a week pre closing you'll want to be sure that your agent and attorney have set firm times in place for walk through, an early closing on your sale and a later closing on your purchase as well as a plan for funding of the loans. Be sure all lenders involved know that there are domino sales taking place. It's best to have your existing house empty at least 24 hours pre closing so that there are no delays or issues at walk through. Be overly cautious when it comes to cleaning and emptying as your purchase depends on your sale. Make sure you have a valid photo ID as well as a clear plan on how the funds will flow from your selling attorney to your buying attorney if they are not the same person. I find it's often best to have the money from your sale wired to the attorney you are using to buy for faster processing and less steps needed. Your lender will also need your closing disclosure from your first sale quickly once your sale papers are final.
* Be ready for the market at all times during this process* that doesn't mean don't live in your house but it does mean keep up with landscaping, repairs and maintenance items as they come up. The minute your yard is overgrown, garage is full and the paint starts to peel on your front door the dream house of all dream houses will hit the market and you will be too far from listing ready to obtain it. Often I'll have photos and video done in advance so that the minute the " I have to have it" house hits the market your house is ready to post in just moments as opposed to days.
*Have a pre marketing strategy* so that while you are house hunting your agent is collecting names and contact information of serious, qualified house hunters who will be candidates to buy the minute you are ready. You can do this through coming soon marketing, neighorood pages, word of mouth advertising and strategic partnerships with other houses for sale that are similarly priced, in similar areas or have comparable amenities. This works like a charm!
If you are in the Andovers, Northern Massachusetts area, southern NH, the Merrimack Valley, Greater Newburyport or North Shore areas I'm here to help you achieve your goal of buying and selling the same day. Call me at 978 457 3406 to share your goals with me today so that I can help you make smart choices about your options in the market!