If you are fortunate enough to be able to buy and then sell your current home, then buying a home with a contingency to sell is not an issue for you. However, this is not the case for many people. Sellers that buy and sell their homes at the same time happens very often.
Selling And Buying Simultaneously
The home buying and selling process can be time consuming, and there are few guarantees. With the Southern California real estate market, homes sell rather quickly. This of course will be due in part to correct pricing and a clean home. The fact that you will need to spend time selling your home means that buying another home at the same time is typically not a workable proposition, unless you are willing to pay for both homes at the same time.
Even if you are willing to take on two house payments simultaneously, will lenders be willing to lend you money on both homes at the same time? Lenders are unlikely to take the risk of allowing two house payments at the same time. The risk is too great.
What this means for you is that you should expect to have your current home sold before you purchase a new home. It may take some work and a little bit of faith, but you can do it. Many, many other homeowners have done exactly the same thing, and so can you.
What About Selling Contingent on Finding Another Home?
Another avenue that some people try to take when buying and selling a home at the same time is to try to make selling their home contingent on finding another home. Frankly, this is a HUGE mistake! I normally advise all my clients NOT to go about purchasing their new home this way.
As a buyer how can you begin to think about spending money on a home inspection, applying for financing, etc, if in fact you really might not be getting the house? Who wants to throw that kind of money away?
If you are selling a home this is a great way NOT to get top dollar for your home. Any good real estate agent will tell you that getting top dollar for your property is all about supply and demand. The more potential buyers their are for your home the better. With a clause like this inserted into your listing agreement you will be eliminating tons of people who would even consider such an arrangement. This is a great way to sell your property for less money than you should!
What About Buying On Contingency?
Essentially a home sale contingency allows a buyer to make their purchase subject to selling their home. Buying on contingency was never that popular because it left sellers holding the bag when buyers were unable to sell their homes, something that happened quite frequently.
The drawback to a home sale contingency for a seller is losing complete control of the process. How does the seller know the buyer will price their home properly and do what it takes to get the property sold? They don’t! The seller in this situation is at the mercy of their buyer doing what’s necessary. Often times they don’t.
Today, it is nearly impossible to find a seller that will accept this kind of deal. Why should they? There are lines out the door of willing home buyers who have no need of a contingency deal.
The sellers that do accept offers based on a contingency are looking to make sure that the buyer’s home being sold has it’s contingencies removed and that the offer, contrary to it being contingent does favor them.
Taking The Right Steps to Sell and Then Buy
Setting up a “game plan” for finding the right home will make the process much smoother.
Spend Some Time Searching
I tell my clients, go to open houses. Of course as their agent, I will be sending them listings constantly, but as a buyer they need to do their homework. Go to open houses, as many as you can. Write down what you like, what you don’t like. Create a list for your agent to help narrow down what you are looking for. If you’ve found a home you love, tell your agent. Have them go to the house to see and understand why you like it. Get comfortable with a few specific neighborhoods.
List Your Current Home For Sale
It’s time to put your home on the market! Be sure not to do it before you are ready. There are a few things that you will need to do in order for your home to sell quick for top value. Do what needs to be done to make the sale happen quickly and to fetch the highest price for your home.
Working with a buyer is easier than being the buyer. You have a lot of control. Try to push back the closing date as far as the buyer will allow you to. With new regulations, the average closing time is 45 days or more, though the closing date is negotiable. If the buyer really wants your home they will probably be as accommodating as possible. This may be less objectionable than putting a disclosure on the purchase about you finding suitable housing. Another option would be to close escrow on your current home and pay rent to the new buyer until your new home closes escrow.
Make an Offer on a Home
Now that your home is under contract, it is time to start putting in offers for the home that you want. You are going to need the dates in the contract in order to structure the offer just as so to protect yourself. One date you will want to follow is the mortgage contingency date. This way if something happens you will have an escape with the sale that prevents you from losing your deposit.
As long as both offers go through, you should be able to sell and buy very close together. The majority of homeowners manage to do this without even needing to rent temporary housing. On most occasions when buying and selling a home at the same time, the closing for both the buy and sell will happen on the same day. The closing on the home you are selling will take place in the morning and the home you are buying in the afternoon.
What is The Worst Case Scenario?
What’s the worst thing that can happen? Getting your home sold and not finding another home suitable to purchase in time. While this isn’t idea, it isn’t the worse thing to happen. It will require extra planning such as finding good temporary storage and other large items.
Having to double move is never pleasant but at least your home is sold and you don’t have to buy on contingency. You can relax a bit knowing that your home has sold and you don’t have to buy on contingency. Now you can take you time and find the home you truly love.
You Can Do This