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Selling an existing home and buying a new home are exciting experiences. In the current real estate market, some homeowners are doing both in a short period of time. But doing so can be especially tricky due to the low inventory of homes for sale. So, for those contemplating a move, there are several important considerations. Should you buy first, and then try to sell your current home? Or, rather, should you first make sure your home is sold before you make an offer on a new home? What if one of the homes needs substantial work? Under what circumstances would it be a good idea to find a temporary place to stay to accommodate the timing of one or both transactions?
In some cases, people want or need to go through the buying and selling process at the same time. But beware. In today’s market, a single transaction can be challenging. So accomplishing two transactions in a close sequence can be especially tricky. Some buyers attempting this have found themselves without a place to call home because their current house sold and they were unable to complete the purchase of a home to move into immediately. If you want to sell and buy in close sequence, our real estate agents have several tips that can make the process easier.
Our number one tip is to hire an experienced REALTOR®. Buying or selling a home, particularly during the current real estate climate, requires a certain level of expertise and experience with proper timing, pricing, and negotiation tactics. A deep understanding of the contractual documents and the lending process is important for both your sale and your purchase. Getting critical milestones to occur in proper sequence requires alert, knowledgeable coordination. And, when you’re juggling the task of preparing your house for sale and are looking for your next home, your experienced agent will guide you. You will have a ‘roadmap’ and reasonable expectations. When you’re doing both in tandem, the work, and complexity more than doubles. Letting an experienced REALTOR® help you navigate these complexities can prove invaluable to your peace of mind and your bottom line. Keep in mind, the buyer of your home will likely be represented by an agent. And the seller of the home you buy will also likely be represented by an agent. So having your trusted agent to help you navigate the myriad of steps is important.
We highly recommend using only one agent if you intend to buy and sell a home at the same time. Including an additional person into the mix will complicate the process and will confuse the buyer/buyer’s agent of your current home and the seller/seller’s agent of the home you purchase. When it comes to real estate transactions, there’s definitely such a thing as “too many cooks in the kitchen.” Finding one trustworthy agent who understands your goals, objectives, and wishes will simplify the process and minimize stress.
After selecting your REALTOR®, it’s important to define exactly what you want in your next home. Having a clear idea of your must-haves vs. the features that are optional will help your agent help you find the right home and properly manage your timeline.
Even if you’re not quite ready to list your home, proceed as if you plan to do so. Start making repairs, cleaning rooms, decluttering, and preparing it for market. This is a good way to spend your energy when you’re not looking at homes. If you plan to buy and sell your home at the same time, it is important that you be ready to act when the time is right. Your REALTOR® will be able to help you determine the right time to list your home. It has been said that our homes have never looked as good as the day we put them on the market for sale. And those who make the full array of preparations are the most successful with their sales.
Keep in mind that, just because your house is on the market, you don’t have to accept the first offer that hits the table. Your agent will be able to help you consider offers that come in. In the current seller’s market, multiple offers are more than common. With any offer, there are a significant number of considerations. While the price you are offered is important, the other conditions are worthy of consideration including the method of payment by the buyer, the timing, and factors concerning the inspections.
When you’re buying and selling a house at the same time, it’s especially important to be ready to take action when you find the right home. When you find a property that you want to purchase, make sure you’re ready to make an offer so that you don’t potentially miss out on your future dream home. Knowing your desired budget, locations, preferred number of bedrooms/bathrooms and any other amenities will help your agent find homes for you to consider in a timely manner. You also need to know your financial abilities to purchase. How much money can you afford to spend, considering both cash and a home mortgage?
Getting pre-approved makes buying a home significantly easier. In fact, in the current real estate market, unless you can pay cash, it is essential to have the strongest possible financing letter. Having a letter of pre-approval means that the bank is ready to give you a loan based on their findings when reviewing your finances. It also means that your interest rate is locked in for a designated period of time, giving you a distinct advantage when you’re ready to buy. It does not, however, mean your loan is fully approved. One surprising trend in the current market is that buyers who have access to cash are often making cash offers that are not contingent on a loan or on an appraisal. By removing the financing contingency, the buyer is assuring the seller that unless there is a major inspection problem, the sale will be completed.
Read More: A Guide to the Home Buying Process
Due to the extremely limited number of homes for sale, the seller rarely needs to consider an offer that is contingent on the sale of another home. If you’re considering using a contingency clause when buying and selling a home all at once, a REALTOR® can be an invaluable resource in determining whether or not to use one and, if so, how the clause should be worded. Using a contingency clause when buying a new home usually means that your purchase of the property hinges on certain conditions being met, such as the sale and closing of your current home.
This is one of many occasions when having an experienced agent comes in handy. In fact, the agent and the seller of the home you want to buy are more likely to consider a contingency based on the information provided to them by your trusted agent.
Coordinating the purchase and sale of a home at the same time can be quite the balancing act, and having a contingency clause in your contract can provide you with a sense of security. However, bear in mind that contingency comes with risk. Unless your current home is under contract already, the seller of the home you want to purchase will likely retain the right to terminate your contract to purchase their home if they receive a contract that is not contingent on the sale of another home.
Based on all of this information, using a contingency should be a ‘last resort’ in your process. You should use one only if there is no other way you can proceed with the purchase of your next home.
Being flexible during this process is the key to success. In a perfect world, you would buy and sell in one fluid motion and start the next chapter of your life. However, while orchestrating a scenario with so many moving parts, sometimes our best-laid plans can get derailed.
Be prepared with a backup plan should buying and selling at the same time not go the way you envisioned it. Did your house sell before you managed to find your next home? Consider a short-term rental or temporarily moving in with a relative. Did you buy a home without selling yours? Look at your budget to ensure you have the finances to carry both mortgages and/or consider turning your former home into a rental property. If your current home is listed and not under contract, you may need to consider a price reduction or some refinement of your marketing process. Perhaps there are repairs and updates that need to be done. Perhaps your home needs to be professionally staged. As with all the aspects mentioned in this article, keep an open mind and be as flexible as possible. And of course, pay attention to the recommendations of your real estate agent.
Marx-Bensdorf has been serving clients in Memphis and surrounding communities for over 150 years. We have a deep and wide knowledge of the housing market and trends here in Memphis and we are confident our licensed REALTORS® can help you sell your current home and buy your future home. To find out more about buying and selling a house at the same time, reach out today!