Buying a new home before selling your current one
Homeowners need to remember what is most important in this transaction: getting the most money for your home and buying the property you truly want for the lowest price you can. Many homeowners aren’t always able to qualify for a mortgage on a new home until they sell their current home. When sellers hear that they often say: “But what if I can’t find the home I want? I can’t list my home until I find the home I want to buy!”
As a result, some get caught in the cycle; they stay in their current home for a long time waiting to list until they find a home they want to buy, but they can’t buy the home they want until their home is already sold.
“Can’t we just make an offer on a house and tell the sellers we’ll list our home right away if they accept?”
The answer is yes, of course, you can try, but nine times out of ten the sellers will reject your offer due to the potential repercussions of that large contingency. The only time we see an exception to this is if the buyer is willing to pay more than anyone else, and even then, the sellers are unlikely to accept because of the risk on their end. The strongest offer- generally without this contingency- tends to be accepted, even if it’s not for the most money.
The correct steps to selling and buying a home go like this:
- Start searching for your new home in earnest and try to really narrow down where you want to buy.
- List your current home.
- Accept a strong offer on your current home with a contingency to protect you so you have enough time to find suitable housing.
- Then, and only then, make an offer on the home you want.
Sounds scary, doesn’t it? But this is the best, and often the only, way to go about it. It is the exact order in which most people do it.
There are some steps you can take to protect yourself and decrease your chances of having to find temporary housing:
- Research where you want to live, so when the right house comes on the market, you can be ready to strike.
- Add a disclosure on your listing that says any sale will be “subject to seller finding suitable housing”
- Negotiate a closing date as far out as possible, preferably 90 days, to give you more time to find a home to purchase.
- You can offer to pay the buyer rent for a certain period of time after closing, known as a rent back, in the event that the closing on your new house is delayed.
- Sellers always have the option to not accept any offers if they don’t meet their needs.
Be sure to consider the time of year. This process can be done in any month, but late winter and early spring is often the best time to start. Why? If you list in the winter, when the inventory is lower, you will sell for more. By the time you need to find a home and make an offer, it will probably be spring, when more and more homes are being listed for sale.
The winter and spring of 2020 looked different, however, leaving many buyers and sellers no choice but to wait until late spring/early summer after the surge of COVID-19. Of course, hiring an experienced Real Estate agent who has successfully completed these kinds of transactions, and is taking the proper safety precautions, is key to having this all come together this year.
We understand that this is nerve-racking for homeowners, but it is impossible to eliminate every risk when conducting a real estate transaction. If you cannot buy before you sell, then you simply should list first. Yes, there is the chance that you will not find what you want, but that is the worst-case scenario. In our experience, however, we see this happen less than 10 percent of the time.
It is a leap of faith, but one worth taking to get the most for your sale and the best house for you and your family.