Learn how to do it all at once by adding these steps to your checklist and plan.
Seller’s market selling and buying a home can be challenging, even in the best circumstances. In a seller’s market the buying can mean stress overload unless you are prepared and have a plan for success. Here are some things to consider when you want to sell and buy a home at the same time in a seller’s market.
1. Assess and Make a Plan to Sell and Buy
Selling is the easy part, buying the new home is the challenge in a seller’s market because of low inventory and home prices.
Understand the market
To prepare for the process of buying and selling your home at the same time, know current real estate trends. You can get a market report by going to my MLS website https://stanwickre.com. This is important so you have a sense of how quickly homes are moving and for how much. This, in turn, will help you with your timeline, your listing price, and how much you can afford.
Communication is key
Communication between you and the agent is also key to a successful sell and buy. There is a lot of information that needs to be effectively managed. I strive to create a plan for every seller with the key tasks needed for selling and buying.
Understand your options
I’ll also share the options that a seller’s market has created for you as a seller, you have many options right now. Negotiating the length of your close, rent-backs, short-term rentals, and other ways to bridge and add more time between buying and selling.
2. Minimizing the Stress of Buying
Understand your finances to buy the home is crucial. Do you need to sell your current home to have the down payment for your new home? If you do, you need to understand the contract contingency to sell your current home when purchasing or considering interim financing or securing a bridge loan.
Purchase contract contingency for selling your home means the purchase of the new home will depend on the sale of your existing home. To be frank in the seller’s market this is not an option on newly listed homes. In a hot seller’s market, the sellers are not having to consider or choose a buyer with a home to sell. If we can get the seller to accept your offer with a contingency to sell your home. We need to have your home in escrow or on the market as a minimum. If the home you want to buy been on the market for over 30 days, then this might be a desirable option for everyone involved. However, don’t expect to pay a lower sales price too.
Consider Bridge or Interim Financing
Bridge Loans or Interim Financing might be a great alternative to remove a contingency for sale to purchase. These loans allow you to own two homes at the same time if you don’t have the money for a second down payment. Make sure you’ve evaluated your options before you make decide.
3. Factor in the Price of Your Next Home
When setting the price of your home, consider what you want to spend on your new home and weigh this against the market value. Make sure to leave a cushion when considering your new home budget. Have a buffer and manage your expectations.
Make sure you cover your sale price with your purchase. If you know the general price range you want for your next purchase, lets talk and find out what you’ll need to get from the sale of your current home in order to cover it. This is the key step to selling and buying.
4. Pre-Approved Mortgage
Knowing what you can afford is crucial. Often, buyers will be upgrading to a bigger home and think because they have a current mortgage, have a down payment, or are making more income they can upgrade. This is not always the case. Make sure you know your limit. By having a Pre-Approved Mortgage, you won’t be setting yourself up for disappointment after you find your dream home.
5. Covering Yourself in Between the Buy and Sell Process
Just in case those planets don’t align on schedule, make sure you have a Plan B if your home is in contract or on the market. It is rare if the new home closes at the same time as your existing home. A little off in either direction and you could be paying dual mortgages or be homeless.
Make sure you have an emergency fund for such a situation. You may find you are in a hotel for a week or two. You may want to consider short term rental options (like an Airbnb). Consulting with friends and family may also give you some arrangements until your new place closes.
Another option is a Rent-Back Agreement. This provision would have you renting your home back from the buyer (now the owner) from the time of closing until you are ready to move. The buyer does not have to agree to this, and their agreement to this scenario will likely be determined by their own buying and selling situation. But it doesn’t hurt to ask. Have a back-up for this back-up!
6. Selecting a Closing Date and Time
If correctly chosen, the time and date of your closing can make buying and selling at the same time seamless. The close of escrow is a well-planned process but last-minute delays do happen. Pro Tip: I suggest not to schedule your closing day on a Friday and prefer Wednesday or Thursday. Selling tip: I also recommend adding up to 3 days for the move out after close of sale on your home. Having this buffer in your schedule will help close the deal on schedule and as planned plus give you time to move out and know your home is sold.
Now you have your plan, and you are ready to sell your home and buy a new one at the same time. It won’t be without its curveballs, but the process will be a lot smoother and successful with your checklist or plan complete.
Happy home selling and buying! Please contact me if I can help you selling and buying a home in this supernova hot seller’s market.