Lorraine Ryall
Whether you are moving up or downsizing, selling one home and buying another can be stressful.
Some sellers will sell their home and move into a rental while they look for their new home. The benefit of renting is you are not under any pressure to find your next home, and when you do, you can write an offer that is not contingent on the sale of your current home. The downside is you are moving twice, and depending upon how long you will be renting, you may be living out of boxes for months. Home prices are continuing to increase, along with the interest rate, so waiting to purchase can cost you more on the purchase price and monthly mortgage payment.
Most sellers try to time it so they can sell their current home and purchase their new home right away, so they only have to make one move. There may be a day or two in between, but that’s much better than having to rent for months and move twice. It can be a nice break to have to spend a couple of days in a hotel after all the packing and moving out of one home before you have to move to your new home and start the unpacking. Closing on two homes simultaneously can be quite a challenge, so doing some homework upfront will help keep you on track.
Understanding the Market
The first thing you need to do is know the market. Housing markets can differ greatly, especially if you are selling and buying in different states or even just different cities. The market conditions will play a big role on how you time both transactions. If you are in a seller’s market like we are now, you should be able to get a contract on your home a lot quicker than if you are in a buyer’s market. It also will mean sellers are unlikely to accept an offer on their home if your home is not already under contract. They don’t want to take their home off the market when it’s a strong seller’s market while they wait for you to get a contract on your home. In a seller’s market, your home needs to be under contract before you write an offer on another home.
Consult with a local Realtor to find out about the market conditions in the areas you are selling and buying. Have your Realtor set you up on a search where you will automatically receive homes that match your criteria. Even if you can’t purchase right away, it’s good to see what homes are out there and get a feel for the market. Then, when you are ready to purchase, you have a good idea of what to expect.
Finding Your New Home
It’s so exciting to start looking for your new home, and going through the pictures of homes your Realtor sends you is a great place to start. As you can’t put an offer on a new home until yours is under contract, you may not want to actually view listings right away. After all, there is nothing worse than looking at homes, finding the perfect one and not being able to buy it because you don’t have an offer on the one you are selling. Your Realtor will be able to advise you on how long it might take to get your home under contract, and when would be a good time to start viewing homes.
In the meantime, keep looking at the houses for sale online and even take a drive to some homes you like to check out the area and neighborhood. The home may look lovely in the pictures, but once you do a drive-by, you may realize it’s not in such a desirable neighborhood. Being able to narrow your search as much as possible ahead of time will save a lot of time looking at homes when you are ready to buy.
Writing the Offer
You have a contract on the home you are selling, so now you can put an offer on a new one. When you find the perfect home, you will write your offer just like a regular offer. However, there will be an additional addendum, which is the Buyer’s Contingency Addendum. This contingency will protect you in the purchase of your new home. If for any reason you did not close on the home you were selling, you would be able to cancel this contract and not lose your earnest deposit. All other terms and conditions are the same as a regular contract.
What is the Buyer’s Contingency Addendum?
This addendum is incorporated into the purchase contract at the time the buyer writes an offer.
When the contract has a contingency in place, the transaction is dependent (or contingent) upon the sale of the buyer’s home. If the buyer’s house sells by the specified date, the contract moves forward. If the buyer’s contract on their home is cancelled or doesn’t sell by the specified date, the contract can be terminated and the earnest money will be refunded back to the buyer. It is a good protection for the buyer but a riskier transaction for the seller.
However, most contracts with a buyer’s contingency close on both transactions, so they are not considered a high risk. Whether you are the seller or the buyer with a contingency contract, it’s important for your Realtor to be tracking all transactions in the chain to ensure everything stays on track and any issues that arise are dealt with immediately. The biggest reason contingency sales may have issues closing or closing on time is because of lack of communication.
If you would like more information on buying or selling or the timing to do both together, please don’t hesitate to contact me.
Lorraine Ryall has been a Multi-Million Dollar producer for the past nine years. You can reach Lorraine at (602) 571-6799. You also can send her an email at Lorraine@Homes2SellAZ.com, or visit her website at Homes2SellAZ.com.