With historically low-interest rates and high affordability, and home equity at a high, you may be starting to think about buying your next house. But how does it work to buy and sell a house simultaneously? It can be risky – so here are five steps to take first.
1. Talk to a Realtor® Deciding to buy your next home is like putting the pieces to a big puzzle together. A good agent will counsel you and walk you through the steps without making you feel pressured to skip any of them. Once you find a good agent, listen to them, they know this market better than you do.
2. Get a market analysis of your current home. Have your agent research the current market and give you a realistic idea of how much you can expect to sell your house in today’s market. They should be able to provide you with a view of the NET proceeds you can expect to receive after real estate costs and closing costs. It is essential to know how much you will receive toward your next house or how much you need to bring to the table to sell if you have no equity.
3. Get Pre-Approved for a Mortgage. Even if you “KNOW” you can get pre-approved, sit down with a lender and get the facts on how much you are pre-approved for, how much down payment you will need, how much closing costs are, and what you can expect for your monthly income to be. It would help if you were comfortable with all these numbers before moving forward. You should also find out if you can buy your next home without selling your current home first, especially if you have decided to rent it out. You will need to qualify for both mortgages to do this. The big question is; will you have enough money after the sale of your current home to put down toward your next home?
4. Understand what you can buy. What type of home is within your budget? Have your agent send you listings of available homes that meet your criteria within your budget. Are you seeing what you like? Are your criteria realistic within your budget? The days of low-ball offers are over. There is an inventory shortage right now, so you need to be prepared to act quickly and make a solid offer on the home that you like. Many buyers are opting for new construction to get what they want.
5. Contingent Offer or Contingent Sale? With the low inventory, one challenge for a seller is finding their next home to move to. We do have ways to mitigate this concern. We have sold homes in the past where we have made the sale contingent on the Seller finding their next home to purchase. There is a time frame in the purchase agreement that gives the seller time (usually about two weeks) to find a home of their choice and reach a deal to get that next home under contract. If they cannot find a home in the period, the purchase agreement on the current home can be canceled or the time frame extended if the buyer and seller agree. We disclose the need for the contingency in the listing and actively start looking for a home for the seller once we put their home on the market.
This scenario will always put the seller in a better financial position than the old way of finding the new house first and making an offer contingent on selling the current home. Our Team can help you find your next home and help you negotiate terms in a way that works for you.
Getting Started: Once you have researched, made decisions, and are comfortable in all of these areas, you can take steps to move forward. Work with your agent to get your home ready for the market or up for rent. Start looking at new homes. Your agent may counsel you to wait until you receive an offer on your home to start touring homes; it depends on your situation and the market. When buying your next home, be confident that you are buying your next house when low-interest rates are making homes more affordable than they have ever been.
Need a great Realtor® in the Tampa Bay area? Contact John Warner at 813-215-4450 for a free consultation. We are licensed in Florida.