Need to buy AND sell?
So, due to the fact that (insert life changing event here) you have decided to buy a new home. Only one problem: you already own a home. Is this a problem? Not necessarily, but consider asking yourself these questions first.
1. How much free time do I have?
Just as you will be going to open houses and looking at a number of listings, others will want to take a look at your own house that will be for sale too. If you intend to sell your home, you’re going to need to not only take the time to allow others into the home but also prepare it to be seen (assuming you intend to sell quickly and for the best price possible). The escrow process, filled with paperwork and inspections, is very time consuming. Navigating two simultaneously could feel like a full time job. This is only if buying a home without selling your current home is a possibility, which leads to the next question.
2. Do I need to sell my current home in order to put a down payment on the new home?
It may be possible that you do not need or want to sell your current home in order to buy another. In this case, consider converting it to an income producing rental property. We can you look at potential cash flow and Magnolia Estates Mortgage can potentially help you draw equity out of the property for a down payment on your new home purchase. If selling is a must, then you might want to consider a couple of different options. First, a bridge loan can be used to finance the purchase of a new home while waiting for funding to come through from the sale of your current home. If you absolutely must buy and haven’t been able to sell your home yet, then this could be a good option for you. Keep in mind that the interest you’ll pay for money borrowed using a bridge loan will be higher than the interest paid on your typical mortgage. If this doesn’t sound like a good idea, consider selling your home and renting elsewhere for a while. This will give you the opportunity to wait until you find the right house, enabling you to negotiate without feeling pressed for time. Time this right, and the market may change in your favor. But then again, it might not, and you could be waiting to pay more for a house that was less expensive months earlier. With renting in mind, you might try to sell your home but rent back month to month until you find what you are looking for in a new home. The drawback with this option is that your buyer might not want to be a landlord or may need to move into the home sooner than you are prepared for. This is important to consider because it’s a good idea to limit contingencies in an attempt to entice your buyer as much as possible. The same is true when you put an offer on a home as a buyer.
3. How strong an offer do I want to make on my dream home?
This is an important question to ask yourself because you could have your offer passed on for another’s due to additional contingencies, even if you are offering to pay more for the home. After all, the seller is likely in a position similar to the one that you’re in. They want to move to another house too. If they accept your offer (that is contingent on you selling your home first) they run the risk of missing an opportunity to sell their house during that time to someone else whose offer may not have the same contingency as your offer. Put yourself in their shoes: what would you do? You would probably go for the sure thing, and the sure thing doesn’t come with that contingency. There is a difference between an offer being contingent on you finding a buyer for your home and contingent on the close of escrow. Timing this right is possible, but it’s no walk in the park either.
It’s clear that there are a number of variables to this equation and with that, it’s important to take each of these into account when preparing to buy and sell. If you think you might be interested in moving somewhere down the road it’s a good idea to start thinking about these things sooner rather than later. Once you’ve done that, seek the guidance of someone who understands the local market, various loan options, and how to represent you and your unique situation in order to ensure that you end up where you want to be. At Magnolia Estates Realty, we have experience in the buying and selling of real estate as well as the accompanying financing options. We look forward to the opportunity to sit down with you and learn your unique situation so that we can help get you into your dream home on a timeline and budget that works best for you and your family.