Are you looking to buy a new home AND sell your current home?
Buying a home the first time around was hard enough right? The paperwork, nail-biting negotiations, inspections, appraisals, and finally getting to the closing table.
Now that you’ve already experienced that, add selling to the mix for a whole new level of stress, confusion and excitement. Rest assured it can be done! But planning and having all the upfront information will definitely help the process move along more smoothly.
The first steps are to meet with your Realtor to talk about your home and with your lender to go over your financial situation. Together these two meetings will help you decide which scenario below is best for you: buying first or selling first.
Meeting with your Realtor will help you set a price to sell your home and go over fixes that need to be done to present your home in its best light. You’ll need to do all the normal things that help sell your home including decluttering and possibly repainting.
Meeting with your lender will help decide if you can buy before you sell or if you must sell before you buy. Even if you can buy a home before you sell your current home, often the thought of owning two homes at once is too stressful for a homeowner. If you decide to sell before you buy, meeting with your lender will get you organized for the loan you will need. Submitting all the necessary paperwork up front will alleviate a lot of stress.
Quick reminder of papers your lender will need:
- Last two years tax returns with w2s (complete federal returns!)
- Last two months bank statements, all accounts, all pages
- Last two pay stubs
- 2 IDs – driver’s license, social security card, passport, etc.
So now that you’ve started prepping lets go over the two scenarios: selling before you buy and buying before you sell.
SELL Before You Buy
Most often, people sell before they buy a new home. Lining up the sale while finding your dream home can be tricky. The likelihood of a seller accepting a predicated offer depends on the market.
What are Predicated offers?
In our market there are two kinds of predicated offers: Open Predication and Closed Predication. An Open Predicated offer is when a seller accepts an offer you put on their home, but the home you are selling is not under contract yet. If it is more of a sellers market, it may be harder to secure a home this way.
Newly listed homes are less likely to accept an open predicated offer. Although an open predicated contract doesn’t completely take the home off the market, there tends to be a steep drop off of buyers looking at the home. If a home is newer to the market, a seller may want to see if they can secure a contract without the contingency of another sale.
A Closed Predicated offer is when you put an offer on a home predicated on the sale of your home, but you have your home under contract. This is more attractive than an open predicated offer but may still make another
seller nervous if you are not through inspections or an appraisal on the home you are selling.
In a predicated situation, the best scenario for you and the seller is to have your home under contract, i.e. closed predication.
BUY Before You Sell
This may appear like the dream scenario on the outside. You buy your new home, you have the ease of moving in slowly or maybe painting before you move in, but what if the home you are selling doesn’t move and you have two mortgages? How long is that sustainable for you?
That is a serious question to ask yourself and communicate to your realtor. IF this is the route you go, be upfront with your realtor about how long you can have your home on the market. An aggressive marketing strategy and plan to get your home sold quickly will really help in this situation.
Whether you sell first or buy first, make sure you have a PLAN B.
Why a PLAN B? Because lining up the buy/sell or sell/buy can go many different ways.
Plan B when you sell first:
What if your home goes under contract, but you can’t
find your dream home? I NEVER want my client to settle on a home just because their home sold quicker than they expected. Having a Plan B will relieve a lot of stress here. Examples of a Plan B in this situation:
Stay with a relative/friend for a couple of weeks while you look for a new home
Move into a rental for a couple of months
Rent back from your buyer (I usually try and sway against this but I have seen it done)
Plan B when you buy first:
What if the home you are selling doesn’t sell as fast as you thought it would? Do you have the savings to carry both mortgages? Examples of a Plan B when you’ve got two mortgages for longer than you’d hoped:
Be prepared to reduce the price of your old home more than expected in order to get it sold
Rent out your old home until you think it will sell for closer to what you want
Ready to chat?
In the end, whichever option you choose, just know it is possible to get the job done, just be sure to have a game plan and a Plan B. It will help alleviate some of your stress.
Buy and Selling doesn’t have to be stressful though. If you want to know more about how I market homes to sell fast, or about the buying process with me, check out these helpful links:
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Did all of this info on buying and selling at the same time leave you with any burning questions? Email me at firstname.lastname@example.org. I’d love love love to hear from you!