Every real estate transaction is different and unique. Some transactions are straight forward while others have obstacles that need to be overcome. One of the more complex situations in real estate is when someone wants to sell and buy a home at the same time.
It's important if you’re planning to sell and buy a home at the same time, you understand what options you have and also understand the potential scenarios that can result.
What Is The Difference Between Non-Contingent & Contingent?
If you’re in the market to sell and buy a home at the same time, contingent is a term that you should become familiar with. A Contingent sale can easily be defined as a sale occurring only if other circumstances are fulfilled. In real estate there are many common contract contingencies that can exist.
Understanding the difference between a non-contingent buyer and contingent buyer is very important. A non-contingent buyer is someone who is able to purchase a home without needing to sell a property in order to do so. A non-contingent buyer is the type of buyer that you want to attract when selling your home. When buying a home, it’s also the type of buyer you’d prefer to be, especially if you’re buying a home in a sellers market.
A contingent buyer is someone who is able to purchase a home, however, needs to sell a property in order to do so. If you’re selling a home, receiving a purchase offer contingent on the sale of another property is certainly better than receiving no offer, however, it is common that a purchase offer that is contingent on selling another property does not end up closing.
BENEFITS & ISSUES WITH BUYING BEFORE SELLING
The time it takes to buy a home cannot be predicted. Some buyers will find the perfect home on the first day they look at homes and others may take months. One benefit of buying a home prior to selling your home is that you know you’ve found a home that you want to buy. If you know that what you’re looking for in a home is not common or easily found, buying a home prior to selling your home could be a good option for you.
Buying a home prior to selling your home is not without issues
If you need to sell your existing home in order to buy a new home, submitting an offer subject to the sale of your home can often lead to your accepted offer getting 'rejected' if the vendor receives an offer that is 'better' with less contingent clauses. The vendor may request that the contingent buyer either removes their contingency of needing to sell their home (and provide proof that they are able to either by providing a bank statement or pre-approval indicating they have the immediate funds available) or their offer will be null and void. This is the reason buying a home prior to selling your home can be distressing - losing a home that you fell in love with can be extremely difficult.
Another potential drawback to buying a home prior to selling your existing home is that some sellers will not entertain contingent offers.
Most people who have bought and sold homes in the past will tell you that selling a home is more difficult than buying a home. A huge benefit to selling your home prior to buying a home is that you know you’ve secured a ready, willing, and able buyer. This is extremely beneficial when looking for your new home as you will no longer be sale contingent. A buyer who is not sale contingent is a much more appealing buyer for sellers.
Another benefit of selling your home prior to buying a new one is that you will know exactly how much your home is going to sell for. This can be extremely important for a buyer if they are planning on using the proceeds from the sale of their existing home.
If you’re going to sell and buy a home at the same time, it’s critical you hire a top real estate agent who has experience with helping people sell and buy homes at the same time! The primary reason for making sure you have a top real estate agent and also the biggest drawback of selling your home prior to buying a home is the possibility of having to rush to find a new home.
A top real estate agent can help negotiate not only a longer settlement on your existing home but also attempt to negotiate a rent back period of your home. If your real estate agent is able to negotiate a rent back, this can allow additional time for you to remain in your home which can allow you the time to find a new home.
PREPARING TO SELL & BUY SIMULTANEOUSLY
Before selling your home, it’s extremely important to make sure your home is market ready. There are certain things you should know prior to listing your home for sale.
One of the best ways to get your home market ready is to get advice from a local real estate professional. A real estate agent who is an expert in your local area will know what you should do prior to your home being listed for sale. They should be able to give advice on what repairs, upgrades, and updates that you should consider doing prior to listing your home for sale.
SORTING OUT THE FINANCIALS!
A homeowner who is going to sell and buy a home at the same time needs to have their finances in order. The most important thing to find out prior to selling and buying a home simultaneously is whether you can qualify for a mortgage without having to sell your existing home. The majority of people are unable to do so but if you’re able, this can be a huge advantage.
When getting pre-approval for a mortgage, ask the mortgage consultant you’re working with about the option of bridging finance.
This will allow you to secure a loan for the new property while you conduct the sale on your current property.
HAVE A PLAN
One of the biggest mistakes that homeowners make when attempting to sell and buy a home at the same time is not having a game plan in place.
Below are several questions that you should answer prior to beginning the tricky process of selling and buying a home simultaneously.
1. Will I list my home prior to looking at homes that are for sale?
2. Will I make any offer received contingent on finding a suitable property for myself?
3. Will I find a new home prior to listing my home for sale?
4. If needed, do I have a place to move should my home sell fast and I haven’t found a new home yet?
5. If needed, can I afford to put my belongings in storage for a short period of time?
6. Can I afford to purchase a home that would make it worth selling my existing home?
To sell and buy a home at the same time it’s important to understand exactly what to expect throughout the process. Its also vital to have a game plan in place and to stick to it!
If you think buying a home prior to selling your existing home is the best for your situation, then stick to it! If you think selling your home prior to buying a new home is the best for your situation, then stick to it!
In most situations, I strongly recommend that you sell your existing home prior to buying a new home. It generally will make the process less complicated and can also be significantly less stressful and disappointing.
If you’re a homeowner and are not sure where to start with the sale of your current home and purchase of your future home.
Please contact ADRIAN AT ONE AGENCY SUNBURY on 0402 168 535.
I’d love to share my expertise and give you my advice on how to get your home sold and how to find a perfect new home while keeping the process seem stress free!
Like and share www.facebook.com/oneagencyAdrian for local real-estate updates.