Buying & Selling at the same time?

Running out of space and dreaming of your forever home?  Or, maybe you are wandering around your current home that is just too BIG and expensive to keep?  Are you thinking of your next home, but need to sell the current home first?  You're not alone.  This year many people will decide their needs have changed and move from the current home to their next home.  Maybe it's smaller, maybe it's larger, maybe it's your Dream home, or maybe it's your Forever home. 

When you are ready I'll be here to guide you as I have many people over the years.  I manage this type of sale all the time.  It's a dizzying idea to move two homes at the same time, but I work with contingencies like this quite often.  The Krohe's were moving  from a  Petersburg log cabin to a home with acreage closer to family in New Berlin.  Helping the  Martins downsize from 3 acres in Cantrall to a newer Ranch in Chatham. Finding strategies for the Evans to move from a home with a small yard, to another Rochester home where their 3 boys could spread out and play, or moving the Daniels from the home where they raised their family into their quiet forever home where they could peacefully watch horses play.....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, and if the buyers are truly going through with the deal.  If that's not an option for you then be sure to read all of my tips below.

Do you prefer to sell before you buy?

    Contingencies to consider

• 1. 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.  Sounds like a GREAT option.  BE WARNED - this does limit the amount of buyers  who are able to wait for you to find a home.  For buyers who aren't in a rush, your home would be a great choice.  This time frame would normally be around 2 weeks.
• 2. A Home Sale Contingency - While you we are marketing your home For Sale, this allows you to submit an offer on another house, and the offer will only go through IF you sell your current home by a certain date (determined in the contract). IF your house does not sell, you are NOT bound to buying the new house.  This is a tricky one to understand, but there are strategies to make this offer look attractive to sellers.
• 3. A Home Close Contingency -  One of the stronger contingencies. Once you have accepted an offer on your current home, you can submit an offer on your next home that will close AS LONG AS your current home closes.  Many sellers will not consider a Sale contingency, but will look more favorably on a CLOSE contingency.

Most often whichever contingency you have, it will always include a financing contingency.  The offer you submit will depend on the sale / closing of your current home plus a loan commitment from the bank.

BONUS TIP: When at all possible, list your home BEFORE submitting your offer, even if it's the same day.  BEFORE is better than after offer submission.  It shows sincerity.  

Would you rather buy first then sell?

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 us 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.  We can help 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.  Not only will you not have to prepare the home and leave for each showing, you can also take time to clean, freshen up paint, complete the work that would enhance the value and sell for stronger price.  We do have professional designers on our team and can discuss staging your home, to help highlight its features, this can be very beneficial to the way buyers feel as they walk through your home. 

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?  We will make some suggestions for you.

Secrets for doing it all at once... 

How to handle the flow of both transactions when they *HAVE* to happen the same day.

• How much is your house worth?  It is crucial to have an accurate idea of how much your house is worth AND how much the selling costs will be.  What you NEED out of your house can be different than what your house is worth, and your market value  rests on what buyers are willing to pay.  This makes the process of positioning your home in the market a fundamental step, we are experts at this process.  Considering your location, property condition and price against the current and recent competition is what will give us an accurate idea of sales price.

When we meet with you to determine the value of your current home, we will give you a list of things you can do to start preparing. Better to spend time getting ready to sell your house before you put offers on your next home.  It's very stressful to fall in love with your next home then come back to your house and have to empty a garage, paint a dining room and clean out a basement before you can attract your own buyer.  We say this over and over again. This is the EASIER way!

• Be Pre-Approved!..... "But I don't want to ge 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  contingency without a pre approval guarantees you will have to overpay to even be considered.  And even this higher offer gives no promise  the sellers will take your offer seriously without a letter from the bank.  You NEED your pre approval so when we are negotiating a house for $300,000, and the seller wants $315,000, 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.  This letter needs to be valid and recently dated. 

• House hunting here we come.  So by now, we know how much you'll spend to sell you house, we know how much to expect to earn from your 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 a 4 car? Is a pool important?  How about walkability?  Now is the time to look closely at what the available houses offer you and determine whether or not 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 another 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 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 sellers are usually the most willing to work with a contingent offer.  That's where our team of contractors, interior designers and handymen comes in.  We can help you figure out if it makes sense to pursue or to keep searching. 
• It's time to put the plan in motion.  Once you see there are options that make it worth the move it's time to put your house up FOR SALE.  Over the years, I've learned the best strategies to making  a splash on the market.  First day of "This house is now for SALE" should make a statement that make people stop and take notice.  In our meeting of determining the value of your home, we will also include a timeline of how long before you can hit the market and what the average days on market is in your town or neighborhood, along with the price range you should expect.  We also have a backup plan in case a price adjustment is needed.  Having the home pre-inspected and professionally photographed are two strategies that help your home stand out AND help the seller of your next home take you seriously. Providing this marketing plan to the seller can also help them realize how prepared you are to sell your home and ultimately buy their home.
• 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  deep discount unless the list price is far off of true value. Enhance your strength by skipping the typical Earnest Money deposit of 1% of the offer price, and bump it up a notch.  Make yourself stand out wherever you can and consider offering 3% - 5% of the offer price in your Earnest Money.  Make this deposit as large as you can, comfortably and safely, as they are a part of your mortgage down payment and closing cost.
• They Said YES!!!  Now we're cookin' with FIRE!  Found your next home, your current home is under contract and they are closing on the same day!! I'm not going to sugar coat it, this is a stressful time.  We do everything we can to make this transition as smooth as possible.  In order to sell your house - you will need to be moved out.  The home will need to be empty and clean BEFORE you go into closing.  Sometimes this means your belongings are on a movers truck ready to be unloaded, and occasionally we can negotiate BOX POSESSION in your next home.  This means, you get the keys to the garage and unload (not unpack) your items into the new garage a day or 2 before closing.  You will attend the closing of your current home first, then go the closing of your new home.  From there you walk out with the keys and the process is complete!  
  • About a week pre closing you'll want to be sure that your agent has  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 sell to your buy, if they are not at the same location. 
  • I find it's often best to have the money from your sale wired to the title company 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

BONUS TIPS
* 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.