Here's a no-brainer: Moving sucks.
Here are all of the considerations that we'll break down in this article:
Can you buy a new house before selling your old one?
Buying your new home contingent on selling the current home
Requiring a "Rent-Back" Period on your listing
1. Can you buy a new house before selling your old one?
The first question that must be asked when moving from a current home to a new home is “Where’s the money?” And this breaks down into 2 sections.
Number one, where is the down payment coming from? And number two, do you have the income to support both house payments at the same time?
If you need the equity from your current home for the down payment on your future home, you’ll need to sell it first. And even if you have the down payment in cash versus home equity, you’ll need to show a lender you can comfortably make both payments. If you don’t have a rental history, the lender is unlikely to allow you to use hypothetical rental income in calculating your debt to income ratios.
If you can afford to sell your current home first and move into the second home before you have to list and sell the first home, that is going to be the most ideal scenario. As mentioned above, you have to have the funds available to do so, which understandably most move-up home buyers will not have.
2. Buying your new home contingent on selling the current home
Let’s explain what we mean when we say, “make a contingent offer.” Most offers are contingent on a number of variables, i.e. inspection contingency or financing contingencies. In the Greater Seattle market, when we say a “Contingent Offer” what we are referring to is an offer “Contingent on procuring a buyer for the current home”
A “Contingent Offer” is inherently tricky as explained by the Washington Association of REALTORS in this youtube video
It is critical that your real estate agent be familiar with this complicated transaction and that you invest considerable time going over the pros and cons with your REALTOR as it pertains to you in your unique situation
There is a second way. You can put your current home on the market, procure a buyer and enter a contract. Then, once you have already procurrerd the buyer for your current home, you make an offer subject to the successful closing of the current offer vs waiting for a buyer to present themselves.
The second method is inherently less risky to all parties for a number of reasons, but it creates a limited time for you to find the new home.
3. Sell your current home with a "Rent Back" agreement
Arguably, this is probably one of the easiest solutions to preventing a double-move. In a "Rent-Back", the seller continues to occupy the property after closing until a set date. The buyer becomes a landlord, and the seller becomes a tenant. This agreement could last for as little as a few days, or as long as 3-4 months. Rental amount and terms can be negotiated.
The drawback is that these terms will limit the number of potential buyers interested in your home and you may end up with a lower sales price because of the terms you are offering.
Doing two simultaneous real estate transactions can be a lot of work, especially with the added stress and expense of moving more than once in a short time period. You absolutely need an experienced, ethical, and overall savvy real estate team to walk you through the process for both deals.
If you're moving out of state, be sure to ask your REALTOR for referrals on hard working out-of-area agents! We have a network of top agents from coast to coast and can ensure you get a REALTOR that will take great care of you.
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