Have you ever wondered how people can buy a new house while selling their old one at the same time? It can be risky, so here are five steps to take first:
Talk to a Realtor
Deciding to buy your next home is kind of like putting together a complex puzzle. A good real agent will counsel you and walk you through the steps without making you feel pressured to skip any of them. Once you find an agent, listen to them, they know this market better than you do.
Evaluate the Market
Have your agent research the current market and give you a realistic idea of how much you can expect your current home to sell for in today’s market. Your agent should be able to provide you with an idea of the NET proceeds you can expect to receive after real estate costs and closing costs. Knowing your net proceeds will help you know how much you will receive to put towards your next house, or how much additional funds you need to bring to the table to be able to sell if you have no equity.
Obtain Mortgage Pre-Approval
Even if you’re confident about getting pre-approved for a mortgage, sit down with a lender and get the facts on the amount you are pre-approved for, how much down payment you will need, how much closing costs are and what you can expect your monthly payment to be. You should be comfortable with all these numbers before moving forward. Additionally, inquire if it’s possible to buy a new home without selling your current one first You will need to qualify for both mortgages and have a down payment available in order to do this, but in today’s extremely competitive market it will give you an edge to be able to make an offer that is not contingent on closing on your current home.
Determine Your Buying Potential
Understand the type of home that fits within your budget. Have your agent send you listings of available homes that meet your criteria within your budget. Are you seeing what you like? Is your criteria realistic within your budget? The days of low-ball offers are over. There is an inventory shortage right now so you need to be prepared to act quickly and make a solid offer on the home that you like. You may need to bid above the current list price if there are other interested buyers.
Contingent Offer or Contingent Sale
In a market with low inventory, sellers often face the challenge of finding their next home. To address this concern, there is an option to include contingencies in the purchase agreement. We have sold homes in the past where we have made the sale contingent on the Seller finding their next home to purchase. There is a time frame in the purchase agreement giving the seller time to find a home of their choice and to reach a deal to get that next home under contract. If they fail to find a suitable home within the given period, they can cancel the purchase agreement or the timeframe can be extended if both buyer and seller agree. We disclose the need for the contingency in the listing, and actively begin searching for the seller’s next home once their current home is on the market.
This scenario will always put the seller in a better financial position than the old way of finding the new house first and making an offer contingent on selling the current home. However, it’s worth noting, in this time of extremely low inventory and multiple offers, many sellers may not accept offers contingent on the sale of your home, even if you have already accepted an offer on your current property.
Getting Started
Once you have researched, made decisions, and feel comfortable in all areas listed above, you can take the steps to move forward. Work with your agent to get your home ready for the market or up for rent. Start looking at new homes. Depending on your situation and the market conditions, your agent may advise you to wait until you receive an offer on your current home before touring potential new properties.
Click here to request your current home value estimate.
Work with an agent that specializes in the Columbia Metro. Contact Donna Garrick at (803) 921-9778 for a free consultation. Licensed in South Carolina.
