Survival Guide on Selling to Buy at The Same Time | #KeriTV Episode #5
Hey guys, it’s Keri TV, and today I’m talking about something I’m dealing with quite a lot. How do you sell your current property, buy another property, and not become: one, homeless - oh gosh - or two, be paying two mortgages? If you’re in the process of doing something like this, I’d definitely tune in today to hear these tips and tricks and common practices.
First of all, you’re either: one, looking for some more space; two, moving to a better location - hey, moving on up; or three, maybe your family’s growing. Maybe you’re selling a condo and buying a single family home with a yard. There’s a lot of different reasons you could be selling your home and buying another home. You don’t want to end up without a home or with two mortgages. Now, there’s a few different ways to do this. First, you may already have a down payment saved up so you don’t need to use the down payment on your current home to get into your next home. That means you can sell your home at your leisure after you’ve already bought a place and purchased it, move things in, and get settled in when you have time. Two, maybe in the same way, you’re borrowing a down payment from family members or friends so you have the flexibility of selling your home on your own time, which is really great. Third, you may be able to negotiate into the offer, when you’re purchasing, a rent-back on the buy side. That means the person buying your property lets you stay back in it so you can use your funds to buy the next property. Another good option is a short-term rental. This can be a bit hectic because you, the kids, the boyfriend, husband, dogs, parents, and everybody gets into a short-term rental. It’s double the move. You’re living in an awkward space for a month or two. I don’t super love that option, but it is a good option.
Now let’s talk about the most common scenario. I’ve got to sell my house and I’ve got to move, right after it’s sold into the new one. This one can be a complicated process, but with the right people in place to help you, you will do this with flying colors. Here’s how it works. Say you go out and you see a house at 123 Banana Street. You call your realtor and say, I love 123 Banana Street. I have to make this my house. What do I do? I don’t want to be homeless. I haven’t even listed my house. Most agents, and most coaches will tell their agents to tell people, you’ve got to have your house listed before you go out and see other properties. You don’t want to walk in and see a house that you fall in love with that you absolutely cannot make your own. That’s a huge bummer. Most people scurry to get their homes ready when they find something they love, which is a little hectic, but you can make it happen. You’ve got to be prepared to have your house photo-ready, be prepared to show it, get all the paperwork signed, and everything ready so you can put your home on the market. How it works is you see that house on Banana Street and go to write an offer. In this offer, you put in a home sale contingency. That means that you are not buying Banana Street unless you sell Apple condo. Should we call it Apple condo? Sure! Basically, it goes in as one of your other contingencies. You’ve got your physical inspection contingency, your loan contingency, and your appraisal contingency. It’s just one other contingency. They usually have the same time lines as, say, your loan. It could be fourteen to twenty-one days. Either way, sellers can look at it not unfavorably, because it’s just another part of the contingencies. Now, keep in mind if the sellers have other people interested in their property that are not contingent, they may lean towards them, unless you’re offering another million dollars on the house. Then, hey. Do whatever you want. You can walk in on donkeys. It’s great.
Here we go. We’ve put an offer on Banana Street. We’ve got a contingency in place. Now you want to sell Apple condo. Here’s what you do. You put it on the market and have the buyers come in. When the buyers write their offer, you put in a home sale contingency in that offer as well. That means, hey guys, I’m so excited you’re buying my place, but I am not able to sell this unless I buy Banana Street. If you understand that, then we can get into escrow, you can do your inspections, get your appraisals done, and work on your loan. As soon as you release your contingencies, I will release my contingencies on Banana Street and then everyone will go skipping home to their new home purchase. Just to back up a little bit, both buyers, you on Banana Street and your buyer on Apple street, move forward, do your home inspections, do your appraisal, get your loan ready, and then you’ve got that other contingency in place that if either doesn’t work, you, who are buying and selling, are safe. You’re not losing your deposit. You’re not losing your home, and you don’t have two mortgages.
When you’re ready to go, you say, hey guys on Apple condo, do you want to release your contingencies? I’m ready to go on Banana Street and I can’t wait to get in! I’m sure you can’t wait to get into my place. Then they say, yes, we’re ready to rock and roll. The buyer on your place, when they release all their contingencies, still know that you could cancel on them at that same time, but they wouldn’t be out any money. Neither would you. Most often, when you tell them you’re ready, they release contingencies and you are home free. You release on your next property. At any time throughout the process, if you’re not sure you’re buying Banana Street, you do not have to sell Apple condo. It works a little bit like dominoes. The most important thing, and this is what I say pretty often, when you’re working with people you trust, that have your back, and are specialists, they will be sure to walk you through the process and get you into that great new home.
This is a pretty exciting time. I love working with people through these tight time lines, because it’s something I’m really familiar with. I’ve actually seen quite a bit of it. A lot of my clients are selling their condos or smaller homes and moving into bigger homes. I’m super excited to help anybody with this process. If you’re watching out there and you’ve got an agent, make sure they’re a specialist, and hey, they can always call me for tips, right? So, see you later. Keri TV will be back next week.