How to Move to Your Next Home with Ease Week 4

My 5-part series is a “how-to” guide for moving to your next home with as little stress as possible. 

Whether it’s your first time moving, or you’ve done it before, this series is a great resource. This time around, you’ve got more to think about, plan, and “get right” then when you bought your first home.

This article is for those buyers who need to sell their current home before buying their next home.  You have probably already spoken to your lender, and they have already indicated to you that you need to sell before you can purchase.

If you haven’t yet read last week’sarticle,The Big Moving Question: How Do You Buy and Sell at the Same Time? go back to read that first. That way you’ll know which option you plan to do first — sell or buy your current home. Next week, we will cover buying first.

Let’s Get Started

At this point, you should know your criteria for this next home, your budget, and a neighborhood you’d like to focus on for your home search. You want to be fully prepared and ready to go whether you are selling or buying first.

Please read through the other articles in our series if you haven’t already since they will show you how to be prepared for this step: Should I stay OR should I Go? and What Moving Buyers Need to First Ask Themselves.

Sale of Home Contingency

When you must sell your home before you can buy, one strategy is to use a home sale contingency. That is, you make the purchase of your new home contingent on first selling your current home. Before deciding on this strategy, you need to make sure that current conditions in your target area support this strategy. 

If the real estate market where you are looking strongly favors sellers, then most sellers will not accept an offer with a contingency where you need to sell your current home before you can close. Of course, if time is not an issue to the seller you may be able to use other contingencies (cash, waiving inspections, or appraisal, etc.) to make your offer more attractive.  

Seller’s who accept a home sale contingency in a strong seller’s market may be less likely to negotiate on other items such as repairs. You can make this contingency more acceptable if you are already on the market and have a signed contract on your current home. Now your home sale contingency is less risky.

Conversely if the market strongly favors buyers, you will have less competition and more bargaining power when setting the terms or conditions of your new home purchase.

Remember if you go with this option, depending on the current market you will need to have your current home on the market or ready to go on the market quickly once you have submitted an offer.

Another Option — Make a Plan

There is another way to make this move happen without relying on a “sale of home contingency.”  And here’s how:

Follow the next three steps so you can time it all to sell your home and still buy your move-up dream home.

1.)  Find the house first, just don’t buy it. 

Before you sell your home, you need to find your new home or know where you will live.  While finding your next home may be easy, not pulling the trigger right away can be emotionally difficult. 

So start looking for your next home now but DO NOT put in an offer, as financially you cannot buy the home while you still own your current home. Last week you made the decision to sell first, and you should have had a conversation with your lender where they pre-approved you to buy the new home only after selling your current home.

You need to look for a home now to make sure what you are looking for, in the neighborhood you are targeting and within your budget is realistic. In other words, given your criteria, budget and location can you buy your new home in time to be out of your current home.   

In other words, go window shopping for your next home. Decide where you are going to buy, what you are going to buy, and how much you are going to pay.  You need to understand what your options are, what house you can afford on your budget in the location you are targeting.

Once you feel confident of where you will end up and the homes that fit your criteria and budget in the location you are looking at, it’s time to move on to the next step.  Note we haven’t placed any offers yet, just have the information we need to move forward once your home sells.

2.) How to time everything to make sure you get a new home when you need one. 

Now that you have identified the location/neighborhood you want to move to, you need to understand the pace of the market in the neighborhood. That is, how often homes that meet your budget and criteria come on the market in the neighborhood and how long they remain on the market.   

Your agent can easily send you a list of what has sold over the last 12 months so you can see the pace of sales and the likelihood of one being available when you need one. 

By doing your homework up front you will understand what constraints your face and the timing you need to consider. You need to understand the flow or rhythm of that market whether you are buying or selling.

For example, the year-end holidays are traditionally a slower time for real estate, fewer sellers and fewer buyers, so it will take longer during this time of year to buy and sell.

You will need to decide if you want to wait for a more active market to make your move, however, remember this provides a different set of challenges. A more active market means more houses available to buy BUT it also means more competition from other buyers.

Talking to your agent up to a year in advance of making a move can be very beneficial as your agent can help you understand the market rhythm in your current neighborhood and in your target neighborhood.  Then you can design a strategy that works best for you and your families’ individual circumstances.

3.) Focus on selling your current home.

Okay, you know where you are planning to move and the availability of a home that fits your criteria and budget when you are ready to pull the trigger. Now you need to focus on getting your home ready to showcase and list.

Hopefully you have been doing some decluttering, clearing out closets, small maintenance tasks, etc. while going through the first two steps so you only need to put the finishing touches on your current home to get it ready for buyers. Be prepared to do what it takes to sell your home for the most money. 

Stay calm and positive, it’s important to make sure you don’t come across as desperate to sell or shortchange yourself so you can’t move forward to your next home.

Once You Sell

Hurray! You sold your home and now it’s time to find your next one. 

With luck, your buyers are flexible on when they need to close so you have some time. It’s important to make sure you have a friendly co-operative relationship with your buyers. Remember to be cordial and flexible with your buyers and they will do the same in return.

Here are some options to help give you some time to find and close on a new home

• Rent back your old home after the closing for a month or two. If your buyers really want the home and have some flexibility, they may be willing to agree to this. Many first-time buyers who are not trying to sell themselves before buying can agree to this.

This gives you time to go find a home, close, and move during this month to 2-month period.  Since you did all the upfront work of identifying the neighborhood, type of house and budget this should be a fairly smooth process. Your agent also can do some marketing to entice homeowners to sell their home or maybe there is already one on the market for you.  

With a rent-back, you already have your funds from the sale of your home, and no more mortgage so your lender can approve you quickly since a sale contingency is no longer necessary.  Note that most rent-backs can’t last longer than 60 days from the settlement of your previous home because of owner-occupancy rules and regulations governing the buyer’s mortgage.

It’s important to be very careful about putting an offer in or signing a contract on a new home before yours has closed. Life happens and there are times when a home “falls out of contract” so while this is not the rule you do need to consider it a possibility.

Find a place to stay between homes. Another option is to put your stuff in storage and move into a short-term rental or with friends or family. It’s not ideal but much better than making a hasty decision.  It’s better to deal with short-term inconvenience rather than make a mistake and have to live long-term in the wrong home.

I know this can sound confusing, but it’s easier than you think.  Of course, timing and planning plays a huge role in making sure the steps above go on without any hiccups or hassles. 

Reach out to me to schedule a meeting so we can put together a plan based on when you want to be in your next home, and we’ll work backwards to make it happen. 

Contrary to popular belief, the time to talk to put together a plan is months, even a year, before you want to move if possible, so the more time before you are ready to act, the better!

Next week is our final installment and it will show you what you need to do to buy your next home first and then sell your current one if you have the approval of your lender to do so.