Selling your home when you still need to shop for a new one can feel daunting to even the most seasoned homeowner––especially when the demand for new homes just keeps rising, while the supply feels like it’s dwindling.¹ You’re not alone especially if you’re already feeling drained by the complex logistics of trying to sell and buy a new home all at once. This is no longer real estate 101; navigating this experience is like skipping college and jumping into your masters degree. Why do that with only online publications or websites?
Online tools are so helpful for searching out a new home; we think it SHOULD be exciting, but most of our homebuyers admit that it can also be stressful with an unpredictable market with plenty of competitors. Unfortunately, waiting out a competitive housing market isn’t going to the best idea either since listings are expected to remain limited in the most coveted neighborhoods for some time.²
That doesn’t mean, though, that you should just throw up your hands and give up on moving altogether. In fact, as a current homeowner, you could be in a better position than most to capitalize on a seller’s market and make a smooth transition from your old home to a new one. For anyone buying a home please don’t allow pricing to intimidate you; you want to own your house, set a fixed overhead budget and grow equity.
As a seasoned team, we can guide you on how to grow your NET WORTH, shape your equity and capitalize on appreciation over the years instead of juggling unaffordable rental prices (and a leasing market that is just as competitive, which only benefits investors). Price is just one element. There are many ways wrestle that mortgage monkey; however waiting for a price drop isn’t one of them.
Gorden & I have built our business to help our clients prepare for the road ahead and answer any questions you have about the real estate market. We thought it might help you feel better to review some of the most common concerns we hear from clients who are trying to buy and sell at the same time.
“WHAT WILL I DO IF I SELL MY HOUSE BEFORE I CAN BUY A NEW ONE?”
This is an understandable concern for many sellers since the competitive real estate market makes it tough to plan ahead and predict when you’ll be able to move into your next home. But chances are, you will still have plenty of options if you do sell your home quickly. It may just take some creativity and compromise.
Here are some ideas to make sure you’re in the best possible position when you decide to list your home:
Tip #1: Flex your muscles as a seller.
In a competitive market, buyers may be willing to make significant concessions in order to get the home they want. In some cases, a buyer may agree to a rent-back clause that allows the seller to continue living in the home after closing for a set period of time and negotiated fee.
This can be a great option for sellers who need to tap into their home equity for a downpayment or who aren’t logistically ready to move into their next home. However, many lenders limit the duration of a rent-back to 60 days, and there are liability issues to consider before entering into an agreement. If this an option you want to pursue lets discuss what to expect during the rent-back period which may also be needed to win the sellers who own the home you desire.³
Tip #2: Open your mind to short-term housing options.
While it is definitely a hassle to move out of your old home before you’re ready to move into your new one, this has become a common scenario. You may be lucky enough to have family or generous friends who offer to take you in for a short duration. If not, you’ll need to find temporary housing. Vacation rentals from VRBO or Air BnB have become a popular source and month-to-month lease prices can be less than the weekly rates listed. If space is an issue, consider putting some of your furniture and possessions in storage.
You may even find that a short-term vacation to refresh after all the hard work is the best incentive to reward yourself and the kids for enduring the process; especially if online classes or remote work is available for 7-10 days before you move into your new home.
Tip #3: Embrace the idea of selling now and buying later.
Instead of stressing about timing your home sale and purchase perfectly, consider making a plan to focus on one at a time. Selling before you’re ready to buy your next home can offer a lot of advantages.
For one, you’ll have cash on hand from the sale of your current home. This will put you in a much better position when it comes to buying your next home. From budgeting to mortgage approval to submitting a competitive offer, cash is king. And by focusing on one step at a time, you can alleviate some of the pressure and uncertainty. Of course, this is ideal when combining that rent-back request from your buyers so you can pack, shop and prepare for a move after securing a sale contract.
“WHAT IF I GET STUCK WITH TWO MORTGAGES AT THE SAME TIME?”
WELL… this one of the most common concerns that we hear from buyers who are selling a home while shopping for a new one, and it’s realistic to expect at least some overlap in mortgages. To make sure you don’t get into a situation where you are carrying dual mortgages for longer than you can afford, examine your budget and calculate the maximum number of months you can afford to pay both.⁴ We will likely calculate this with you, so Gorden can set the appropriate pricing strategy to meet your goals. Yes, even in a “sellers market” setting the wrong price can create delays or discount bidding.
Rookie agents make big mistakes with pricing; Gorden is not only a Certified Listing Agent, he trains with appraisers annually to avoid gaps in expectations with the bank. His expertise in logistics and contract negotiations have undoubtedly improved the final equity position for all of our sellers.
If you simply can’t afford to carry both mortgages at once, then selling before you buy may be your best option. (See Tip #3 above.) But if you have some flexibility in your budget, it is possible to manage both a home sale and purchase simultaneously. Here are some steps you can take to help streamline the process:
Tip #4: As you get ready to sell, simplify.
You can condense your sales timeline if you only focus on the home renovations and tasks that matter most for selling your home quickly. For example, clean and pre-pack all of your common areas, refresh your outdoor paint and curb appeal, and fix any outstanding maintenance issues as quickly as possible.
But don’t drain unnecessary time and money into pricey renovations and major home projects that could quickly bog you down for an unpredictable amount of time.
We include a project punch-list advise you on the repairs and upgrades that are worth your time and investment as part of our agent services. Kemberly is also a Professional Staging Consultant.
Tip #5: Prep your paperwork.
You’ll also save valuable time by filing as much paperwork as possible early in the process. For example, if you know you’ll need a mortgage to buy your next home, get pre-approved right away so that you can shorten the amount of time it takes to process your loan.
We also recommend getting started to provide a clear title or property deed, which is required to transfer ownership and easy to select a reputable Title Company to get started on verifying county records as well as the key party to manage your contract terms from start to finish. Learning if there are any snags to address will keep a closing date on track before crunch time.Similarly, set your home sale up for a fast and smooth transition by pulling together any relevant documentation about your current home, including appliance warranties, renovation permits, and repair records. That way, you’re ready to provide quick answers to buyers’ questions should they arise.
Tip #6: Ask us about other contingencies that can be included in your contracts.
Part of our job as agents is to negotiate on your behalf and help you win favorable terms. For example, it’s possible to add a contingency to your purchase offer that lets you cancel the contract if you haven’t sold your previous home.
We will always discuss the pros and cons of contingencies and tactics to protect you and what’s realistic given the current market dynamics.
It is our goal to minimize the risks you may face, while working hard to win the home of your dreams; so expect education and honest options every turn. No two contracts are alike.
“WHAT IF I MESS UP MY TIMING OR BURN OUT FROM ALL THE STRESS?”
When you’re in the pressure cooker of a home sale or have been shopping for a home for a while in a competitive market, it’s easy to get carried away by stress and emotions. To make sure you’re in the right headspace for your homebuying and selling journey, take the time to slow down, breathe and delegate as much as possible. Even our most experienced sellers, have noted our step-by-step protocol has taken the edge off, and surpassed former experiences when moving.
Our servant business model is one you can count on to keep each week focused on achievable goals. We work hard to anticipate obstacles and offer a safe place for reality checks along the journey.
Tip #7: Relax and accept that compromise is inevitable
Rather than worry about getting every detail right with your housing search and home sale, trust that things will work out eventually––even if it doesn’t look like your Plan A or even your Plan B or Plan C. We’ve learned to leave room for God to guide us around or away from pitfalls; and stay the course when it feels a bit turbulent.
Perfecting every detail with your home decor or timing your home sale perfectly isn’t necessary for a successful home sale and compromise will almost always be necessary to obtain your ultimate dream. That doesn’t mean you’ll settle for less than desired but it does mean the way we “get there” may be very unpredictable.
Luckily, by working with us you’ve got a good team of professionals and trusted vendors that have your back and are monitoring the details behind the scenes. Life always works better in teams.
Tip #8: Don’t worry too much if your path is straying from convention
Remember that rules-of-thumb and home-buying trends are just that: they are estimates, not facts. So if your home search or sale isn’t going exactly like your neighbor’s, it doesn’t mean that you are doomed to fail. See Tip #7 to keep your hopes up!
It’s possible, for example, that seasonality trends may affect sales in your desired neighborhood. According to the National Association of Realtors, the housing market tends to be more competitive during the summer and less competitive during the winter.⁵ This is one of those “trends” that should not be a hard and fast rule, as every real estate transaction is different. That’s why it’s important to talk to a local agent about your specific situation.
Tip #9: Enlist help early.
Which leads us to our final tip: If possible, call us early in the process.
We’ll not only provide you with key guidance on what you should do ahead of time to prepare your current home for sale, we’ll also help you narrow down your list of must-haves and wants for your next one.
Not only will you be prepared to act quickly, our ultimate goal is to build your confidence when it’s time to make your move. (Pun intended, here!)
It’s our job to guide you and advocate on your behalf. So don’t be afraid to lean on us throughout the process. We’re here to ease your burden and make your move as seamless and stress-free as possible.
BOTTOMLINE:
COLLABORATE WITH A REAL ESTATE PROFESSIONAL TO GET TAILORED ADVICE THAT WORKS FOR YOU
Buying and selling a home at the same time is challenging. It doesn’t have to become a nightmare, and it can even be fun. The key is to educate yourself about the market and prepare yourself for multiple scenarios. One of the best and easiest ways to do so is to partner with a knowledgeable and trustworthy agent.
As experienced agents, Gorden will not only help you evaluate your situation, we will also provide you with honest and individually tailored advice that addresses your unique needs and challenges. You can’t get that on the web or by clicking “I’m interested in this home”. The biggest stressor is not having a plan or a trusted expert to empower you with today’s latest tactics. With over 500,000 new agents joining the real estate industry since 2020, be mindful that these decisions revolve around the largest investment decision you may ever make. Choose wisely.
Depending on your circumstances, now may be a great time to sell your home and buy a new one. Or it may not. You can expect we won’t shy away from conducting a thorough assessment which may reveal you may better off pausing your search for a while longer. As part of the Silver Elk family, you’ll always feel confident about making wise decisions.
Contact us for a free consultation so that we can help you review your options and guide you to decide the best way forward.
Sources:
- Board of Governors of the Federal Reserve System, FEDS Notes – https://www.federalreserve.gov/econres/notes/feds-notes/housing-market-tightness-during-covid-19-increased-demand-or-reduced-supply-20210708.htm
- Federal Reserve Bank of St. Louis, FRED Economic Data – https://fred.stlouisfed.org/series/MSPUS
- Realtor.com – https://www.realtor.com/advice/sell/what-is-a-rent-back-agreement/
- Bankrate.com – https://www.bankrate.com/real-estate/sell-your-house-while-buying-another/
- National Association of REALTORS – https://www.nar.realtor/blogs/economists-outlook/seasonality-in-the-housing-market
