What to Expect When You're Buying a Home While Selling Your First Home
Do you remember what it was like buying your first home? If it's been several years, you may find that it is easier today with the assistance of digital mortgage technology, which may help to eliminate the need to wet sign many documents.
But that's not the only thing that may be different this time around. For this purchase, you may also be juggling the sale of your first home while you shop for your next. So how exactly does that work?
Although the extra "balls in the air" make it a little trickier, rest assured we are here to help.
How to Buy a Home While Selling Your First Home
Ideally, you'd want to use the equity from your first home as a down payment for your new home. Passing it from one place to another in that manner may make your move easy-peasy.
Unfortunately, it rarely happens as seamlessly, and that's partly due to the market conditions. So if you are in the market to buy your forever home, research your local real estate market first. Look at both the area where you are selling and the areas you are considering your next purchase.
When considering the selling side, look at how long comparable properties have been sitting on the market. This information is useful for determining how to price your home to make it both competitive while still making a profit, if possible. It would be a shame to list your home only to drop it several times before you get traffic or an offer.
Dropping your asking price too many times can psychologically make a home appear less valuable to potential buyers, also. You can research comparative homes on your own. However, a real estate agent may be able to find the best comparables while suggesting a price based on your move timeline.
Considering the purchase of your new home, you'll also want to research the market. Decide in which areas you want to purchase so that when your current home is under contract, you'll know precisely where to bid. Of course, you'll also want to have already talked with a mortgage loan officer just in case you need a loan for your new home purchase.
About Contingency Offers
A "sale and settlement contingency" offer is when you use the proceeds from your current home to fund the purchase of your new home. Of course, this means that your offer is dependent on the sale of selling your existing home.
While ideal for you as the buyer, it's not a very attractive deal for the seller of the home you hope to purchase. If another offer comes in from a buyer without such a contingency, they may win the bidding war.
Sellers may even be able to entertain other offers after they've accepted a contingent offer! For a "non-contingent" offer, you may want to consider a bridge loan.
A bridge loan is a rent-back arrangement. Essentially, you agree to "rent" your current home. That way you can sell your home and still live in it for 2-3 months while you shop for your next home. This option is not always available, but it's worth looking into.
There are many moving pieces to buying a home. Luckily, you have a team available here at KS StateBank to take care of all the details. We can work with you and your realtor to make your next purchase as fast and hassle-free as possible. Contact us today to learn more.
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