The Balancing Act of Buying & Selling your Home at the Same Time
When you are in the market for a new home, you may find yourself in the situation where you are both buying a new home and selling your existing home at the same time. To some, this task can be overwhelming …and at times, risky.
Here are some important tips and facts that we’ve gathered along the way to help you get started in the right direction;
Decide whether or not you are willing to purchase your new home prior to selling your current home
This initial consideration is very important to a successful buy/sell for two reasons;
- In a competitive real estate market, many sellers will not entertain an offer from a buyer that is “contingent” upon the sale of the buyer’s current home
- Even if you feel as though your current home will sell quickly, consider the fact that the buyer of your home may fail to secure a loan and/or is unable to close last minute do to loss of employment during the process. In short, things happen.
Review your mortgage qualifications thoroughly
If you decide that you’re willing to carry two homes (even if it’s only temporary), you’ll need to make sure you are qualified to do so from a lenders prospective. A thorough review of your income, assets and liabilities early in the process will help determine if this is possible.
Accessing funds for your new purchase
Ideally your current home will sell prior to your new purchase, giving you access to the net sale proceeds. However, in the event your sale does not take place in time – and you need the equity in your current home to complete your new purchase – consider the following temporary options to fund the down payment and closing costs;
- A home equity line of credit (HELOC) will provide you with access now to the equity in your current home. Note that you’ll need to secure a HELOC prior to listing your home for sale. Banks that offer HELOC loans will typically not extend a line of credit on a home if they know the homeowner is selling.
- A loan from your 401(k) or IRA accounts, if possible, may provide you with the temporary funds needed to complete your new purchase.
- Gifts or temporary loans from an immediate family member
Taking the most qualified offer
We all want to get the highest price possible when selling our home. However, if you need to sell your home prior to buying a new home, consider the following;
- Have a qualified full-time realtor assess the value of your home and help you determine a selling price that will attract the most activity. Listing high in hopes of landing the highest price possible may delay things and jeopardize the closing on your new home.
- When considering offers on your home, go with the “most quailed” buyer and not necessarily the buyer offering the most for your home. Chances are, the buyer overpaying will back out during the process and/or may not qualify for home financing due to a low appraisal.
- Have a qualified home inspector complete a pre-sale inspection of your home. That will allow you to take can of any repairs ahead of time that may cause a buyer to back out during their home inspection process.
The buy/sell is a process with many moving parts. Having an experience lending partner on your team to guide you along the way can make all the difference.
The good news is, at American United we’re experts in the buy/sell…having helped thousands of individuals and families complete this task successfully over the years. Call or email today to explore your options and to come up with a game plan that will work for you.
908.322.5423, or via email at: email@example.com