A real person helping real people with real estate
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This is a very common question in today’s real estate environment! With low interest rates and low inventory, homeowners know they can sell their home quickly, and at a great price. These conditions make purchasing a new home a very appealing prospect, but how do you do it?
Many experts suggest listing your current home first. Their reasoning is simple – if you already own a home, your offer on a new home may not be accepted unless your current home is listed. While this option is the best scenario for some homeowners, it does come with drawbacks. By listing your house and obtaining a buyer quickly, you can easily get caught up in the frenzy of trying to find a new home FAST, which can leave you vulnerable to overpaying and/or settling for a home that isn’t what you want.
Luckily, there are other options to avoid that situation!
KNOW YOUR REALTOR:
Your first step is to meet with your Realtor. They will provide you with a current and accurate market analysis of your current home, and guide you through any repairs or upgrades that should be made before listing your current home. Your Realtor can even help you create a schedule for them to help keep everything on task.
KNOW YOUR NUMBERS:
Your next step is to meet with your mortgage professional. They will help you determine how much down payment you will have to work with, what the net profit from the sale of your current home will be, and what your interest rate is based on your credit. These are all important numbers to be aware of, and comfortable with when you make the decision to purchase.
KNOW YOUR MARKET and YOUR PARAMETERS:
Do you have a specific area you are looking to move to? What is the average price per square foot of the house? What will the property taxes and town utilities cost yearly? You will also need to discuss what you are looking for in a new home with your Realtor. Do you want a small yard with less maintenance? Are you dreaming of an in ground pool? How about a 2 car attached garage with work space, or an in-law suite? Knowing what you absolutely must have, or can negotiate with is important. Research is key and knowledge is power, and your Realtor can help you find these answers to determine if the area you are looking at is right for you, and your budget.
KNOW YOUR OPTIONS:
There are many ways to facilitate a sale and purchase without being caught between a “rock and a hard place”.
Buy First: If you have the ability to either pay cash for new house or carry two mortgages then you might want to consider buying first. This will give you the luxury of time to search for your new home and make great purchase decisions. Your mortgage professional can provide the details on this financial situation for you. This option by far gives you the most flexibility with the timing of your purchase and sale.
List First: Since not many people have that option to carry multiple mortgages they can list first and offer their buyers a “rent back option” while making a “contingent offer” on their new home. The “rent back” allows the seller to stay in the current house after closing and “rent” it “back from the buyer. The offer on the new home is “contingent” upon the current home closing to that buyer. It is good to have a “backup plan” for alternative living situations (in-laws, relatives, short term rentals) just in case to keep your sanity!
While this can be accomplished easily with sound contract negotiations, it does put the pressure on for you to identify a house quickly and can often make the process feel rushed. If you find this is the option that best suits your situation, your Realtor can make it much less confusing and stressful.
Identify your purchase and THEN list: With a sound strategy, advance preparation and solid contract negations, you can find your house FIRST, and then list so that you are still not carrying two mortgages. You will also not be under pressure to quickly identify a house that may not be on the market at the time you accept your buyer’s offer. It IS possible to have your contingent offer accepted on your purchase without being listed if you can demonstrate that you are ready to list. This is a great solution to reducing the stress, managing the timing of the closings, and finding the right house to purchase at the right price.
Which option is best? The simple answer is that it depends on your individual situation and what you want to achieve with your sale and purchase. Each option presents advantages (and disadvantages) but it really comes down to what makes the most sense for you and your family. Meet with your Realtor and put together a plan. Selling and buying a home is a complicated process that can be very stressful but it doesn’t have to be! Strategy, preparation, forethought, market knowledge, experience and sound contract negotiations can make this one of the best moves of your life!