Tuesday, August 13, 2019 / by Paul Wolfert
Can I Buy Another House Before I Sell Mine?
Are you a homeowner that’s looking to buy a new property but feel stuck because you have to sell the one you’re in first? If you’re in a position where you need to buy and sell at the same time, I’m going to show you exactly how to do it—and it’s easier than you think. In this video, I’ll let you in on 2 secret strategies to find the best deal before someone else does, all while avoiding scary situations that could leave you homeless. Because careful planning and precision timing here are key, and I’m also going to give you a 7-step checklist that will help you transition from your current home into a brand-new property.
Step 1: What Do You Qualify For?
Before you dive into selling your home while you’re trying to buy, be sure to get in touch with your mortgage lender to see if you actually need to sell in order to obtain financing. If you’re able to qualify to purchase a new home without selling first, it’d be wise to save yourself unnecessary hassles and headaches. Remember that the person buying your house will have to obtain financing that will allow them to close on your home; on the other side, you won’t be able to close on the sale of your new property until their transaction is completed. If anything goes wrong in the period of time between closings, it could leave you in a very sticky situation.
Think of everything that needs to happen if you sell your current home but aren’t yet in your new home:
All of your stuff will need to be out of the house for the new buyer to move in
Where will you put all of your possessions in the meantime?
Will you be able to sell your existing house in the morning, and close on the new one in the afternoon?
Will you need temporary housing or storage?
Tight timelines can be extremely stressful, so it’s not the ideal situation. But if you find yourself in this predicament, these next steps will prepare you for the journey ahead.
Step 2: Prepare A Net Sheet For Your Existing Home
A net sheet helps you determine your final profit after subtracting all of the closing costs on your sale. Your realtor can create this sheet for you so you have a clear idea of what your home will realistically sell for. Avoid using online calculators and guesstimates, since they won’t be anywhere near as accurate as your agent.
Don’t forget that the market will dictate the price your home is worth. Your agent’s estimated value of your property is going to be important to give you an idea of how much you’ll profit from your house to put towards your next purchase. Knowing this number ahead of time will help you narrow your search to homes you can realistically afford.
Step 3: List Your Home For Sale
Be sure to list your house with a strategic online marketing plan, including proper positioning, professional pictures, and high-quality video. Your home search at this stage doesn’t need to be aggressive, since your plan is to sell your existing home before making another purchase. What you can do is research online, getting a clear picture of what you want. Try not to fall in love with anything you see, as you’ll be disappointed when it sells. This is the time to searching objectively!
Secret Strategy #1: You won’t need to aggressively search for your new home until you feel an offer coming on. A good agent will let you know when it’s time to get aggressive, usually once you’re getting 5-7 showings a week.
There’s another reason not to look at properties too early: if you try to buy another house when your current home is not under contract, you enter into a house to sell contingency. This means that your contract to purchase the new home is dependent on finding a buyer for your current property.
Sellers will find it difficult to accept these types of offers when they’re unsure how long it will take for you to sell your home. What if your house is overpriced or can’t sell? Accepting an offer that includes a house to sell contingency lessens your exposure on the market and should only be taken if you receive an offer that’s too good to let go.
Having a house to sell can affect your negotiation tactics, terms, and pricing, so it’s best to have your current house under contract before purchasing a new property. Of course, you can still look around at properties, but you’d ideally want to be close to our already have your house under before putting an offer in somewhere else.
Tip: Sellers can show their homes to other buyers if they accept a house to sell contingency, but the status will change on the MLS and this will affect showings. This status change will usually send buyers and their agents looking elsewhere.
While a seller often won’t accept a house to sell contingency, they will often accept a house to close contingency. The means that you already have a buyer, and the contract is only contingent on financing. Most sellers would rather consider this situation, and you’re also more likely to get a better deal since you have better terms to offer.
Step 4: An Offer Is Heading Your Way
Your agent should alert you when you’re close to getting an offer, usually when you’re showing your house 5-7 times per week. If you’re not showing at all, you probably need to adjust your marketing or your price before you accumulate too much market time. Trust your agent’s opinion on when to get aggressive with your home search. Homes are always coming on and off the market, and what’s here today may be gone tomorrow. If you miss out on one property, more will pop up in its place.
Step 5: Accepting An Offer On Your Home
Once you’re under contract, things will really start to happen. Try to negotiate a longer closing date with your buyer (ideally not sooner than 60 days), as this will help you accomplish two vital things:
You need time to buy a new house; this includes house hunting, inspections, financing, and financing approval.
Buyers need time to do their diligence on your house, which includes an inspection to make sure they know what they’re getting.
HOA properties will also need to provide all condo association documents and clear any issues to make sure the property is in good standing.
Step 6: Find Your New House And Get The Contract Accepted!
Once your inspection clears, it’s time to put your new home under contract; doing this no sooner than 35-40 days from your anticipated closing date is most ideal.
Secret Strategy #2: If you’re selling your existing home in the morning and closing on your new house in the afternoon, make sure your title company or real estate attorney has given the lender everything they need for a smooth transaction.
Timing will be crucial if you’re not in a temporary house situation. You’ll need an exact plan with your agent to make sure your appraisal is filed and gets into underwriting immediately, the process your loan goes through once your lender has all the needed information. Make sure your buyer’s lender is also doing everything they need to do on their end to complete the transaction. Their appraisal should be completed within the first 7-10 days after accepting the contract, and their underwriting should be submitted shortly after the appraisal is complete. The buyer must secure financing by a specified date, no later than 35-45 days from your acceptance of the sale, with a mortgage contingency in their contract.
Making sure your buyer’s financing will be 100% approved before the closing date will give you time to deal with any last-minute hiccups.
Step 7: Close…And Close!
With so many moving parts when buying a new home and selling your current property at the same time, planning ahead and having a solid plan in place will eliminate any stress and headaches that can pop up. While there may be some difficulty, following these 7 steps will get you into your new home so you can start the next chapter of your life.
If you need more information or guidance, feel free to connect with me and I’ll be happy to provide you with help on your home buying and selling journey.
-Paul (734)743-1482 or Paul@movingmi.com