These strategies will help you find time to buy your new home.
“How am I supposed to know whether I will find a house I want to buy once my house is sold?”
I get this question a lot in a hot seller’s market with low inventory—i.e., the one we’re in now. A lot of sellers don’t want this pressure and would rather not sell if it meant not dealing with it. First, you should know that there will always be another dream home out there. Many times I’ve dealt with clients who find a home they like and insist it’s the only one they want, only to find another home later on that’s even better. Either that or they lost out on a couple of homes and ended up being glad for it because they eventually found the one they wanted more.
What can you do to put your mind at ease when listing your home in a hot seller’s market with low inventory? Here are three tips to remember:
1. Negotiate a post-closing possession. This basically turns the sold home into a rental home. The buyer buys it (hopefully as quickly as possible), and then you turn into a tenant. This way, you have the equity from the sale to go out and make offers as a non-contingent buyer. You’ll not only be a stronger buyer, but you’ll also have a more flexible time frame.
2. Ask for a longer closing period. Typically, you’re looking at 21 to 45 days. If you ask for a 60-day period, though, you’ll have longer to find something to purchase. Even if you don’t need a home sale contingency, you won’t have to move twice or find temporary housing. The advantage here is that, again, you have more flexibility and less pressure. The disadvantage is that the more time that’s added between contract and close, the more time there is for something to go wrong for the buyer. They could lose their job, have a health emergency, etc. You need to discuss these concerns with your agent if you opt for a longer closing period.
3. Ask yourself whether you really need to sell first. Financially, a lot of things go into a home sale. You need to talk with a trusted mortgage professional and your agent to weigh all your options. A lot of people tell me they don’t want to do something, but it’s not a bad idea to let something play out and see how the numbers affect you. For example, a lot of people are scared of having two mortgages in a hot seller’s market, but that situation wouldn’t last very long. You’d only have one or two double payments. Getting your dream home is worth a little risk.
Here are some other options to consider:
- Get a bridge loan. This means borrowing the money from your current home and using it for your down payment on your next home.
- Purchase your home without having to sell. This depends on how you qualify for your mortgage.
- Hold on to your property as an investment. This means renting out your old home after buying your new one. This way, someone else pays down your mortgage and you can take advantage of the tax benefits and appreciation. On top of that, you’re collecting rental income.
If you have questions about this or any real estate topic, don’t hesitate to reach out to me. I’d love to hear from you.