I recently posted a guest blog post about buying and selling your home at the same time. Why am I writing a new post on the same subject? Because there were so many things I wanted to edit and/or add to that guest post. My guest blog authors aren't necessarily licensed real estate agents, but they have an interest in and have studied real estate. Guest authors aren't out there working with clients and they don't know our contracts, nor do they know about new and different programs for real estate.
When you purchased your first home you didn't have to worry about selling another one. Even though buying a property can be nerve-wracking, I've always thought it was much more fun than selling. Buying and selling a home simultaneously can be an overwhelming process filled with uncertainty and anxiety. The thought of listing your home for sale while searching for a new one may seem daunting, but with the right approach and a bit of planning, it can be a smooth and successful transition. In this blog post, I will provide you with ten invaluable tips to help you navigate this journey with confidence, ensuring that you can list your home without worry and make the most of your buying and selling experience.
One of the first things I hear from most sellers is how they fear they'll be stuck homeless if they sell their home before they find one to buy. They realize that inventory is down, so they are afraid they won't be able to find their next home within the timeframe of getting their home sold.
Why don't they just make their purchase first and then sell? Most sellers need the cash from the sale of their current home in order to close on the new property. If their home doesn't sell and close before they have to close on the new place they will be in breach of contract, although if you keep reading we have a few ways to help prevent that.
1. Start with a Clear Plan
Before you begin your home-buying and selling journey, take the time to create a clear plan. Determine your priorities, set realistic timelines, and establish a budget. Consider your specific needs and preferences for your new home while keeping in mind the potential sale of your current one. Having a well-defined plan will provide you with a sense of direction and make the process much more manageable.
This is also the time to get an outside opinion of how your home shows and if decluttering, staging, or painting and repairs are needed in order to get top dollar and a quick sale. I can help you with that months prior to you actually listing your home, and at no extra charge. This way you'll have time to get your house market-ready in advance before having to rush.
2. Research the Market
Prior to getting your home listed in the Multiple Listing Service (MLS) with your Realtor®, familiarize yourself with the local real estate market. Study recent sales, current trends, and the average time homes spend on the market. Understanding market conditions will help you set a reasonable asking price for your home and negotiate effectively when purchasing your new one.
If I know someone is planning on selling their home, I offer to send them automated market updates for their specific area. This way they don't have to do their own searches, and I can send more than just listings. I can send lists/graphs with details such as average and median list and sale prices, average days on market, and more information. This way sellers can be fully prepared when I meet them at their home to go over a Comparative Market Analysis (CMA).
3. Get Your Finances in Order
Buying and selling a home simultaneously involves financial considerations. Assess your financial situation, including your savings, income, and credit score. Obtain pre-approval for a mortgage if you plan to finance your new home purchase. Additionally, consult with a financial advisor to understand any tax implications or potential costs associated with the process. Having your finances in order will give you peace of mind and make negotiations smoother.
You will also need to remember that there are costs to sell your home. Some of the costs to sell in addition to paying off the mortgage are:
- brokerage commission
- title/recording fees
- pro-rated real estate property taxes that will be credited to the buyer (if you're in an area where taxes are paid in arrears, like in Arizona)
- repairs that might come up with a home inspection
- offering to pay buyer closing costs
- offering a buyer mortgage interest buydown
- hiring an attorney if you feel the need or your area normally uses attorneys for real estate (not necessary in Arizona)
- Home Warranty for a buyer if offered or agreed on in the contract
- HOA selling/transfer fees
- other general closing fees
You will need to deduct that from what you think you'd be able to get from the sale of your current home and after paying off the remaining mortgage balance. I can create a Seller's Net Sheet to give you a ballpark figure of what you should be netting after the sale.
As you will recall when purchasing a prior home(s), you will also have fees as a buyer in addition to earnest money and a down payment:
- mortgage application
- credit report
- mortgage interest rate buydown points if you choose to do that
- home inspection(s)
- attorney if your area uses them (not a necessity in Arizona)
- buyer title fees
- HOA transfer fees or required application or move-in/move-out fees (for some condos)
4. Coordinate Timing
One of the biggest challenges in simultaneous buying and selling is coordinating the timing of both transactions. Ideally, aim for aligning the closing dates of your current home's sale and your new home's purchase. However, this may not always be possible. In such cases, consider negotiating a rent-back agreement with the buyer of your current home or exploring short-term housing options to bridge the gap between the two transactions.
5. Prepare Your Home for Sale
To ensure a successful sale, prepare your home for potential buyers. Declutter, depersonalize and stage your property to make it appealing to a wide range of buyers. Enhance curb appeal, complete any necessary repairs, and consider small updates that can increase your home's value. Presenting your home in the best possible light will attract more buyers and potentially lead to quicker offers.
I will help you with this, and my suggestions have helped homes in bad locations or with other negatives sell quickly and for prices that even surprised me! I try to help you prepare your home at low to no extra cost to you.
If you and/or your agent feel more extensive renovations would be worth the effort to get the most money possible, my brokerage, HomeSmart, has introduced me to two companies (Curbio and Revive) where there is no out-of-pocket money required for renovations and repairs since you pay at closing. They have contractors in place so the work can be done quickly.
6. Consider Bridge Financing
During the crazy Seller's Market we were in, different programs popped up that allowed you to buy a new home first, move into it, and then worry about selling your current home. If homes sold so quickly, why did a home seller need this kind of program? Because it wasn't easy making a purchase during that time.
A seller could sell their home the day it hit the market. Then they went out to buy and if they were lucky enough to find a home they loved, they then had to make an offer to beat multiple other buyers who also loved the same home. It was tough to beat out high cash offers if you needed to finance.
During that time, a seller turned buyer could forget about offering any kind of Contingent to Sell or Contingent to Close offer. Why would a seller with good, high multiple offers, some cash, bother with that kind of contingency? So a seller turned buyer had to have their home sold or take the risk of their home not selling and losing their (usually high) earnest money deposit.
It's different today, although homes priced correctly that show the best in the area and price range are still receiving multiple offers. You would have a better chance today of having a seller accept a Contingent on Sale or Close contract, although most won't consider Contingent on Sale. Again, this has a better chance of working on a property where there aren't multiple offers, and you won't know that until right before you write yours up.
Knock is a company that provides a mortgage where you can purchase a new home, move into it, and then put your current place on the market without having to be living there during showings. You will not have to pay two mortgages. They are not an iBuyer, they are a mortgage provider that offers the ability for you to buy first, move into your new place, and then sell your current home without having to live in it during home showings.
7. Have Contingency Plans
As mentioned above, there are different scenarios available now to help a seller to be able to sell their home first and then buy the next one. If you don't utilize these types of offerings you will need to prepare contingency plans for unexpected situations that may arise during the buying and selling process. While it's essential to have a clear plan in place, flexibility is equally important.
Consider alternatives such as temporary housing by finding a short-term rental or moving in with family or friends (it's only temporary). You can also try to extend your current home's closing date if needed or ask for a post-closing rent-back (this needs to be done when writing up the contract and you will have to pay rent to the buyer, who will be the owner after closing), or having a backup offer for your new home (which is nice but never guaranteed). Being prepared for unforeseen circumstances will reduce stress and increase your chances of success.
8. Communicate Effectively
Effective communication is key when juggling multiple real estate transactions. Stay in close contact with your real estate agent, mortgage lender, and any other professionals involved in the process. I always maintain open lines of communication with potential buyer's and seller's agents, the title company, and any other parties to the transactions, ensuring that everyone is aware of your situation and any necessary timelines. Clear and timely communication will foster trust, minimize misunderstandings, and help keep the process on track.
9. Seek Professional Guidance
Don't hesitate to seek professional guidance throughout the buying and selling process. Working with a real estate attorney can provide you with legal protection if anything comes up prior to or after closing where a professional is needed. Otherwise, we don't normally use a real estate attorney in Arizona unless an issue comes up.
Consulting with a home inspector prior to listing your home can help identify any potential issues with your current property, giving you peace of mind and helping you make informed decisions. This will prevent future surprises and give you the chance to fix any issues prior to putting the house on the market. We call this a pre-sale home inspection.
Sometimes, if you have a very custom home where there aren't any recent comparable listings to compare to and/or you don't agree on a price with any real estate agent, you might need to pay for a certified appraiser prior to listing your home. If you don't agree with the appraiser then you might have a difficult time getting your home sold. If you do sell it to a buyer that requires financing, the contract could fall apart if the home doesn't appraise.
10. Hire a Trusted Real Estate Agent
Working with a reputable and experienced real estate agent like me can significantly ease the stress of buying and selling simultaneously. I will ask questions so I understand your needs, I am honest and empathetic, and I am experienced with 40 years as a licensed Realtor®. I will guide you through the process, handle negotiations, coordinate showings, and keep communication with all parties in each transaction, allowing you to focus on the transition.
Navigating the process of buying and selling a home simultaneously can be challenging, but with careful planning and these ten essential tips, you can approach the experience with confidence and minimize any fears or concerns. Starting with a clear plan, conducting thorough market research, and getting your finances in order will lay a strong foundation for a successful transition. Working with a trusted real estate agent, coordinating timing, and preparing your home for sale will increase your chances of a quick and favorable sale. Having contingency plans, effective communication, and seeking professional guidance will provide you with the necessary support and peace of mind throughout the process.
Remember, buying and selling a home at the same time is a balancing act, but it's also an opportunity for growth and new beginnings. By following these tips and staying proactive, you can navigate this journey smoothly and confidently. Embrace the excitement and possibilities that lie ahead, knowing that you have taken the necessary steps to make the most of your buying and selling experience. Good luck with your real estate endeavors! Call me, Judy Orr, at 480-906-1500.Posted by Judy Orr on