Get Off to a Strong Start
First, enlist the help of an experienced real estate agent in your area. You’ll need a professional who understands the dynamics of your unique needs and can handle both sales accurately and expeditiously. A seasoned real estate agent will help you save money while making suggestions to make the most from the sale of your home. They’re often resourceful when it comes to identifying the best neighborhood, hiring contractors or finding short-term housing.
It’s also important to price your home competitively in order to entice home buyers and increase the likelihood it won’t be listed on the market too long. If possible, consider pricing your home a little lower than the market price to stir up more interest.
Once you have a contract in hand on your existing home and have found another one you like, be sure to verbally communicate the status of both transactions. Emphasize to all parties the need for smooth timing and follow-through with both home sales.
Use Your Negotiating Power
Next, use your negotiating power to extend the window before your closing date. Instead of the typical 45 days before closing, extend your time to 60 or 90 days to ensure you have time to find a home that best suits the needs of you and your family. You can also request that the buyer rent your home for a month or two after closing if necessary.
Another option is to disclose in your home listing that the sale is subject to you finding suitable housing. This alerts buyers upfront that you’re working through buying and selling homes in a timely fashion.
Temporary housing with a short-term rental is another alternative. Start your short-term leasing research early on in case you have to use this option. Although this isn’t always ideal, it could alleviate the stress associated with aligning perfect timing for both transactions. This also allows you to collect and analyze your money from selling your home before buying a new one.
Explore Financing Options
Most of the time homeowners need to sell their home first to financially qualify to buy a new home. If the sale isn’t completed first, and you have to temporarily own two homes, think ahead about financing options.
If you don’t have enough cash for a down payment, many banks offer bridge loans. Bridge loans are short-term loans that you can take out on your current property to purchase a new one. Bridge loans, also called swing loans or gap financing, typically are offered for a six-month duration. They often carry a rate 2% higher than the current fixed mortgage rate.
Another option is to ask a close friend or family member for a short-term loan with a promissory note. Identify the period of time the loan is needed for and offer a competitive interest rate for the funding. The loan can be set up so no payment is due until your existing home is sold.
In a perfect world, you’ll sell your home first to better assess your financial situation and how much money you’ll need to buy the prospective home you want. This also gives you time to research neighborhood benefits, area schools and tax assessments for your prospective area. The most important thing is to set yourself up for success on both sides of the sales table. It’s important to set realistic expectations on timing, pricing and demand. To learn more, here are some helpful tips on buying and selling homes. Have you been through this process? Share any advice in the comments!
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