Back in the late 1970's when I was a rookie loan officer, the practice of selling and buying a home simultaneously was a fairly common practice. Not so anymore.
There are many reasons why this has become true, but one stands out most. Available housing for sale is in short supply creating very competitive buying scenarios in many markets.
In these competitive housing markets, Sales Contingencies won't cut it come Offer time. Sellers typically won't consider Offers/Contracts that contain them. They don't have to.
- Seek housing and financing counsel & advice
- Sell their current home
- Secure Mortgage Pre-Approval
- Search and find their new home
- Sign a Contract to Buy
To assist them in accomplishing this, I, as their Mortgage Originator, must have a complete and thorough understanding of their financial/credit background and standing. In the sell-and-buy scenario, there are additional questions and considerations (beyond the norm) that must be raised and discussed in order for my clients to make the most beneficial decisions for themselves moving forward.
Some of those questions can be:
- How quickly are homes selling in their current home market?
- What are comparable homes selling for in their area?
- Does the market support a "Contingency Offer" being made on their new home, should their current home not sell immediately?
- What is the likelihood of that Contingency Offer being accepted by Buyers?
- What amount of equity do they hold (if any) in their current home?
- If necessary, could they sustain TWO mortgage payments, should their home not sell?
- How long could they sustain 2 home payments?
- What is their personal comfort level with this possible scenario ... their "risk tolerance"?
- What kind of cash reserves/savings do they have available?
- If your current home sells prior to your finding a new one, do you have somewhere you can stay in the interim prior to Closing? Rent, etc.?
- More ...
My focus as their LO must also remain on their education. It's very important for them to know the facts regarding all their financial options and the costs of selling and buying their home.
- Real Estate Commissions (if Agent(s) services utilized)
- Title Company expenses
- Attorney Fees (if Attorney services utilized)
- Contractual Items (if involved in Sale/Contract)
- Real Estate Tax Proration (owed to Home Buyers at the time of Closing)