In an ideal world, you would buy your new home first and have some time to move your belongings before selling your old home. However, if you’re like most people, you cannot afford to carry two mortgages. Additionally, you may need the proceeds from the sale of your old home to put towards the purchase. In this case, you will need to carefully coordinate the home sale and home purchase. These tips will help you fit those puzzle pieces together.
Which should you do first?
One of the toughest decisions is deciding which to do first. If you find a new home to purchase before listing your existing home for sale, your offer will contain a home sale contingency. If you find a buyer for your home first, then you will need a home purchase contingency. It is important to understand your market before deciding which to do first.
Most areas are experiencing a seller’s market (or the beginning stages thereof). This means that homes are going under agreement quickly due to low inventory. That low inventory, however, makes it difficult to find a new home to purchase. You may therefore be inclined to find a new home before listing the old one.
There are a few things to keep in mind. A home sale contingency in your offer will make it less appealing. It could be more difficult to compete with other buyers in the market if multiple offers are presented. On the other hand, a potential buyer for your old home may be willing to give you time to find suitable housing. Consult with your real estate agent on which is the best approach given market conditions.
Coordinating closing dates/times
You will want both closings to take place within a short period of time. Ideally, you would close on the home sale in the morning and then take those funds to close on your home purchase in the afternoon. If a same day closing is not possible, you may end up closing on two consecutive days. The timing will depend on when funds are available from the banks and the schedules of all parties involved. Scheduling is important since it impacts your other plans, such as moving.
Coordinating the big move
Most buyers will perform a walk-thru of a property shortly before closing. This means that your belongings must be out of the home ahead of time (typically the day before, or very early that same day at the latest). Depending on when your second closing takes place, you may need to store your property overnight and spend one or more nights in a hotel. If you are using a moving company, they often offer overnight storage (for an added fee, of course). Develop a plan ahead of time to help reduce added stress.
There are some other options to consider as well when you are buying and selling a home. Among them are temporary housing, storage agreements, and rent-backs. The alternatives available depend on the properties and parties involved, market conditions, and legal considerations. Be sure to work with an experienced real estate agent to help you through what can be a complicated process of both buying and selling a home. Your agent’s guidance and creative solutions will be invaluable.
By Suzanne Plewes, RE/MAX Alliance in Loveland. Suzanne Plewes is a broker associate at RE/MAX Alliance. Write to 750 W. Eisenhower Blvd., Loveland, CO 80537, call 970.290.0373 or e-mail [email protected].