Five Strategies for Homebuyers Who Need to Sell Their Home Before Buying a New One
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More frequently I am talking to clients who must sell their current home before they can purchase a new home. The challenge is not so much the new home purchase, it is the timing of the transactions. The key is to be well prepared, flexible, and ready to move forward quickly.
Talk to a mortgage Consultant
Now is the time to truly put together your financial plan which will drive everything else moving forward. Talk to a mortgage consultant to determine what you need to do to get approved for a new home loan among other things. Find out what you qualify for without selling your home vs. selling your home. The mortgage consultant might also have programs like “bridge loans” that help you to bridge the gap between your new home purchase before your old home is sold. Develop the best financial plan for accomplishing what you want and provides details on what you need to do to achieve it.
Focus on Selling Your Home First
Although it may more exciting to start looking at new homes, it is important for you to get your home under contract as soon as possible unless your mortgage consultant has pre-approved you for a new mortgage loan without selling. Making offers contingent on selling your home are a very hard sell in this market. You can start looking for a new home to get an idea of what you can afford. Here are some things you should do:
Get a home valuation report from your realtor. Talk to your realtor about your plans and request a report that will tell you the current value of your home. By looking at comparable home sales and not relying on the internet to tell you what your home is worth, you will have a better idea of what you might expect to sell your home for and how quickly.
Set a timeline and commit to it. The real estate market is not stagnant so you must determine a reasonable timeline to put your home on the market. This will motivate you to move forward and also provide your realtor with ample opportunity to market your home.
Declutter and get it show-ready. This is vital to make sure you get top dollar. Now is the time to go through each room and determine what you can remove. I like to use the principles from the book Afrominalism by Christine Platt. Do you need it, do you use it, do you love it? If it does not fit in any of those boxes in the next three months, it should find a new home before you do.
Repair and Replace. Make a checklist of the items that need to be repaired or replaced and set aside a budget and timeline to get it done as soon as possible.
Paint. A fresh coat of paint does wonders for your space.
Evaluate your space after you have done items 1-5 on this list and then determine if you still want to or need to sell. Sometimes you will discover that your current home meets your needs.
Aggressively Look for a New Home and Be Flexible
Once you put your home on the market it is time to seriously start looking for a new home. Be prepared to preview properties daily if necessary with financing pre-approval completed. Before you begin to search for your new home consider a few things.
Determine why you are moving in the first place and besides your budget, let that be one of your main drivers when searching for something new.
Many people want more space and that’s understandable, but do you want more space to hold more things or more people. How valuable are those things you want to shift to another location? Too many people consider the size of their current furniture, exercise equipment, etc…that should not be a dealbreaker. The house is the asset, not your things.
Are you moving to be closer to your job or your children’s school? Consider how far you can reasonably commute or if virtual work is an option to expand the area of your search.
Be realistic about what and where you can afford to move. We all want everything on our wishlist, but flexibility is key here. Create a list of needs, wants and desires for your new home. Focus on the things you need and if homes have other items on your list consider it a bonus.
Consider new construction. New construction has limited if any bidding wars and better predictions of time for completion. Contracts are usually friendly to those who will be selling an existing home and deposits not excessive.
Develop a Plan to Move Temporarily if Necessary
Although it is a seller’s market and you can ask for a rent-back after the home closes, there is no guarantee it will be granted. It is always best to have a contingency plan. Here are some things to consider:
Check with relatives and friends to see if they have a place where you can stay until you find your new home.
Review short-term lease opportunities in your area.
With many businesses still allowing employees to work virtually, consider traveling to another location to live and save additional money for your new home purchase.
commit to your plAN
Now that you’ve read through some things to consider and things you absolutely must do, commit to a plan. A plan will provide you the confidence you need and eliminate the unknowns. Work with your realtor during the sell of your home and the purchase of your new home. It helps to have the same team for both transactions so they truly understand your timeline, priorities and financial strength. A realtor that works with Sellers and Buyers knows things to consider on both sides of the transaction and will do their best to make the transition smooth while protecting your interest.
Cheryl Shaw is Associate Broker at Area Real Estate LLC and a licensed Realtor in Washington DC, Maryland, and Virginia. Contact her for a FREE market evaluation or buyer consultation at 202-823-9313 or ShawSellsDC@gmail.com