The hardest part about today’s tight real estate market can be coordinating the sale of your current home with the purchase of your replacement home.
Most of us can’t buy our replacement home without selling our current home, and we can’t expect to get a contract on that replacement home if our current home isn’t at least under contract and past the all-important inspection objection deadline.
None of us wants to end up homeless as a result of selling our current house without finding a home to buy. With good rentals nearly as hard to find as homes for sale, that could be a real possibility!
So, how do you make it work for you? Over the years, I have guided clients through exactly this kind of dilemma, and here are some of the ways we have made it work.
First of all, I make sure the seller is willing to price their current home so that it will sell. An overpriced home can fail to sell, even in a seller’s market.
With that understanding in place, we make sure that the house is ready to sell — that any deferred maintenance items are handled, the house is de-cluttered, and the family situation allows for easy showing.
Then, before putting their home on the market, we set about finding the house to buy. Sometimes the seller has already identified the house they want to buy. The trick is getting it under contract before it sells to someone else. With homes selling quickly, it may not be possible to find a house and get your current house under contract in time to submit a contract on the new home.
If, however, you can find a house that is for sale but not on the market — for example, a home that was withdrawn without selling last year — then it’s possible that the seller would accept an offer contingent on the sale of your current home. Your agent, with access to the MLS, can search for "withdrawn" and "expired" listings using your search criteria. If any of them appeal to you, your agent could approach the former listing agent (if it's withdrawn) or the seller directly (if it's expired).
That’s exactly the scenario which played out successfully last month for one of my clients. The seller was planning to put their home back on the MLS in May, and that gave my buyers the time they needed for me to list their home and get it under contract. By getting their current home under contract before May, we had no competing buyers and the seller was willing to accept our contingent offer. Mission accomplished!
Another of my buyers wanted to sell their home first, but was able to make a non-contingent offer on their replacement home by using IRA and other resources as “proof of funds” for a cash offer. Once under contract for their new home, we put their current home on the market and got it under contract in time to use the proceeds from that sale to buy the new home without using those other funds. (If my buyer had needed to withdraw funds from his IRA, I learned that he could have redeposited them without penalty if he did so within 60 days, by which time he would have surely sold his current home.)
You’d think that no seller would accept an offer contingent on the sale of a home that isn’t even on the market yet, but last year I proved that wrong for three buyers — and I was on the seller’s side of the transaction. In each case, I was able to determine that the buyer’s house would sell right away, and I was right. Before accepting the offer, I studied the buyer's current home and neighborhood, even visiting the home to see how well it showed. Once I was convinced that their home would sell quickly at the price the agent was planning to list it, I was able to recommend to my seller that he accept the contingent offer. In each case, both transactions proceeded to a successful closing. As predicted, all three of the buyers' homes sold in less than a week.