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Timing the Transition: How to Sell Your House while Buying Your Next

<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >Timing the Transition: How to Sell Your House while Buying Your Next</span>

Selling your house usually comes in one of three typical Selling scenarios, either you are looking "Upsize"  from a smaller home to a larger home; Or you are looking to "Downsize" from a larger home to smaller. Or, you are looking to make a "Lateral" moving to a similar size home for a variety reasons.  

 

While very different, all three of these scenerios are presented with the timing the transition challenge; This article provides 3 transition strategies, explains the Pros and Cons of each, and equips you to make an informed decision on how to coordinate the sale of your current property house while choosing and purchasing your next. 

 

Getting Started

 

You should inform your loan officer that you are planning to sell your current property; He or she will use estimates to determine your Pre-Approval amount contingent upon the sale of your current property. With your Pre-Approval in hand, you can begin setting your buying criteria and shopping for your next home.  (Read more on Pre-Approval and Why its Important here)

 

Next, you'll want to strategize with your real estate broker on the best way to approach your transition.  Specifically, we'll consider market conditions, your goals, unique challenges/considerations, your financing structure and finally the properties themselves.  

 

There are 3 main strategies to Time the Transition effectively; Each option has multiple considerations, all require teamwork and active, effective communication between you and your entire Real Estate Team.   

 

All of the factors will be used to determine which of the following strategies to use in making your transition from the old to the new property while meeting your personal and financial goals and obligations. 

 

Fresh Look Real Estate How to Sell your house while buying your next

 

Contingent Offer Strategy

 

The most obvious strategy is making an offer on your next property contingent on the sale of your current property.  When you decide to make an offer on your next property, we will write the offer contingent on the sale of your current property. In other words, you are not obligated to purchase the new home until you have closed on your current home.  

 

Pros & Cons of the Contingent Offer Strategy

 

The benefits with this strategy are:

  • No double payments
  • Proceeds from sale are used toward down payment
  • Old and new properties are closed almost simutanously

 

The challenges with this strategy are:

  • Coordinating at least 3 parties physically moving from one property to the next
  • Sellers may be less likely to take a contingent offer
  • You may have to wait longer than desired for an acceptable offer on your current house

 

Contingent Offer Strategy Discussion

 

At first consideration, this seems like the best option.  You can be sure you won't need to make 2 mortgage payments, escrow can handle the details of applying sales proceeds to the downpayment of your next property, and the whole transaction feels seamless.  While thesereal estate contract contract.png benefits are tempting, the biggest considerations of the contingent offer strategy has to do with market conditions. 

 

When Sellers have the upper hand, they may be less likely to take an offer contingent on the sale of the buyers property when they have multiple offers with no contingencies whatsoever. On the other hand,  the Seller will likely be aware that the sale of the buyers existing property will likely be reletively quick, so we are often able to reduce this concern by making the offer more appealing in other ways, such as price point and reducing timelines or waiving other contigencies all together. 

 

When Buyers have the upper hand, we are typically able to have a contingent offer accepeted, however, both you and the seller are now waiting for an offer on your current property, and when the market is over supplied, this wait can have a long timeline, depending on the property condition, location and configurations. 

  

Many of our clients opt for this option; This is a viable solution and depending on your situation, it may be the best way to go.  Keep reading to understand your additional options.

 

Buy & Move Strategy

 

The simplist strategy is the Buy & Move option. Some clients are in a financial position to Pre-Qualify, make the down payment and move into their next home before listing their current property.  This is the easist way to handle the transition and may sound financially difficult at first, but there are some financial merits to consider.

 

Pros & Cons of the Buy and Move Strategy

 

The benefits with this strategy are:

  • Easier to upgrade/renovate
  • May be able to effectively market listed property for higher sales price
  • May be able to negogiate lower price with no contingency on next property purchase
  • Option to rent out current property if no acceptable offer is made

 

The challenges with this strategy are:

  • Initial cost outlay includes down payment on next property and any renovations
  • Need to make double payments for an undetermined amount of time

 

Buy & Move Strategy Discussion

 

The financial outlay in the beginning is cost prohibitive for many of our clients; This strategy requires the down payment on the next single family house home orange and grey.pngproperty, 2 mortgage payments during the listing period of the current property, plus any renovation costs.  Even if the pay off from these efforts and investment is lucrative, the financial obligations can prove too cumbersome. 

 

This strategy is often used when our client is also open to renting out their current property.  It may make sense to simply keep your existing property as a rental over the long term.   If that is the plan, the property can then be viewed as an asset and actually contribute to your ability to get Pre-Approved for your next mortgage. 

 

Hybrid Strategy

 

The most common strategy is a hybrid between the Contingent and Buy & Move strategies. With this strategy, you will purchase your next house while simutanously listing your current property.  In other words, you are using financing contingent on the sale of your current property, obtaining an offer your current property, then aggressively making an offer on your next property.  

 

Pros & Cons of the Hybrid Strategy

 

The benefits with this strategy are:

  • Financial Security

 

The challenges with this strategy are:

  • Emotional/Rushed Decisions
  • May need to obtain temporary housing solution

 

Hybrid Strategy Discussion

 

The major benefit of this strategy is financial security; We'll be working to sell your current property while you are shopping and clarifying your buying criteria for your next.  

 

The major challenge here is many clients are so excited about purchasing their next home that they lose focus on preparing the current property for the market and are apt to take the very first offer, at times against the advise of their Real Estate Broker.  

 

While an exciting time and many moving parts, it is important to handle each transaction independent from the other.  First positioning, marketing and negotiation necessary for selling man and women blue graphic.pngyour current property; Then, the offer, inspection, and negotiation necessary for buying your next property. 


Another important consideration with the Hybrid Strategy is making sure you do not rush into the next house with the pressure of your current house closing.  At times, our clients have stayed with friends or family or obtained a short term rental while finding the perfect home to purchase.  The major downside of this is the physical moving, not once, but twice!  

 

With the hybrid strategy, you know your current property is going to close (after all contingencies have been fulfilled) and you can make your next offer without the contingency, but with the financial security that the first property will be sold.  This option may be the most appealling financially, but the variety and magnitude of tasks and decisions during this transition can be somewhat stressful. 

 

Conclusion

 

The 3 strategies described above are the most common, viable options available if its time to sell one place and buy the next.  The strategy you ultimately go with is your decision, we are here to help guide you to your best options, based on the variety of considerations.  However, we will need your help to determine how important each consideration is to you, your situation, goals, and life. 


 

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