The market is heating up, but inventory is still very tight. Buyers are out in full force, and it’s a challenging marketplace. We often get hit with the question, “How do we competitively buy a home when we have a home to sell?” Today we’re going to talk about buying first or selling first, and the three ideas behind each strategy.
Buying First
Strategy #1: Home Sale Contingency
If you’re planning on buying first, one strategy is to write an offer that has some type of contingency to get your home sold. This can work if the home you’re looking to buy has been on the market for 2 to 3 weeks, and therefore the demand might have fallen off a bit. Also, a good buyer agent can show a listing agent that your home is going to sell quickly. You’ll want to have your home ready to go to be on the market and have it prepared in the MLS system, so you’ll be able to show the seller of the home you want to buy that your home is priced right, it looks fantastic, and it will sell quickly.
Strategy #2: Qualify for a Second Loan
You may be financially able to get a second loan to go straight out and purchase your second home. A lot of people are fearful of this because they don’t want to carry two loans, but if you think about it carefully, we’re in a hot real estate climate. You’ll only be holding two homes for a very short period of time, as long as you price the home correctly and market it with the right agent.
Strategy #3: Rent Out Your Home
If you don’t qualify for a new loan and you want to be competitive, what you can do is get a lease on your property to rent it out. That lease should take effect around 60 days from the paperwork being signed; you can show the bank that you have a lease in place to take effect just before you’re going to buy your new home. The bank is allowed to use 75% of your rental income to qualify towards the debt payment towards your primary residents. Now, you should be able to qualify for a new loan on the new home you want to purchase.
Selling First
Strategy #1: List Your Home for Sale Subject to Suitable Housing
First, you can list your home for sale and make it some type of a subject to finding suitable housing/closing on a new home situation. Understand that the more restrictive of a subject to that you put into your list plan, the less buyers there will be that may be willing to accept that contingency. However, in a hot climate, there are more buyers willing to wait for you to find a new home to move into. Once you have a contract in place, then you’ll go out to buy a new home. You’re still going to be subject to your home selling. However, you’ll be able to say, “We have a buyer at the table, we are this far along in the process, and your offer might be more likely to be accepted in a competitive bid situation.”
Strategy #2: Request a Rent Back or Extended Closing Period
This is where you put your home on the market and you request, for example, a 60 day rent back after closing, at, for example, a 60 day closing from an accepted offer. This gives you a total of 120 days to find a property. When you’re renting it back, you have all the cash in the bank from the sale of your home. So, you’re able to go out and make a great offer on a new home while renting your current home back.
Strategy #3: Sell Your Home & Live in Secondary Housing
The third option is to simply sell your home, and go out and find a rental or live with friends or family. We call that secondary housing. It’s going to be an opportunity to sell your home, and now that you’ve moved out into secondary housing, this is going to make you a non-contingent buyer when you go out to buy a new home.
Those are the two options with three strategies under each option to help you be more competitive in this challenging market. Obviously, you always want to hire a top agent in the area you’re looking to buy. We have access to homes that aren’t on the market yet and we have relationships built with other realtors that have homes coming onto the market. This is the time where your realtor matters the most.
Contact us today for a free home selling/buying consultation and we’ll help create a strategy that’s best for you and your family! 978-494-0346
Moving On With Ron
Ron's Real Estate Minute
Home Selling Resources
| Complete Guide to Home Selling | Get a Free Consultation on Selling Your Home |
| 10 Tips to Selling Your Home | How to Prepare Your Home for Sale |
| Find Out What Your Home is Worth |
Home Buying Resources
| Search Homes For Sale Now | View Open House List |
| Home Buying Process – A Complete Guide | 7 Tips to Home Buyer Success |
| Free Home Buyer Consultation | Why You Need A Buyers Agent |
