Relocating for work or family or cost of living always involves a tricky two-step: selling the original house and using the proceeds to subsequently purchase the new one. On the face of it, such a dual transaction appears fairly simple -- unless two sets of negotiations, two mortgage lenders and the challenge of synchronizing the conveyances are factored in. In fact, the prospect of it all can seem down right terrifying. Yet even with all the complexity of the sell/buy scenario, there are certain consistent fundamentals which, if followed, take the anxiety and aggravation out of the bifold undertaking.
Be Proactive About Getting the Current Home in Shape
Since timing is an essential element in this simultaneous -- or near-simultaneous -- scenario, the earlier you start, the better. This means making your present property presentable to prospective buyers before you do anything else. Once you begin the home-shopping process yourself, it is easy to neglect the needed painting, landscaping and repairing that attracts would-be purchasers to the house you need to offload. Waiting too long to do this might lose a seller some very willing and motivated inquirers. Also, who knows how soon home value will turn?
Have an Alternative Plan Ready
At the outset of a home sale/home purchase, the seller has in mind how things will pan out: house sells in 30 days and the new house is purchased later in the afternoon. All it takes is one of the many cogs in the plan to fail for the whole scheme to crash and burn. For example, the title search for the seller's house shows a lien on the property or the buyer's homeowner's policy fails to satisfy her lender because it does not come near to the home value. Any number of things can cause a postponment -- short or long -- of a scheduled closing. This is why the seller should have contingency measures in place. An additional mortgage payment ready in case the delay lasts into the following month is one example. Lodging arrangements if the purchase closing is pushed back is another.
Get Pre-Approved for the Purchase Financing
Even veteran homeowners can miscalculate how much loan they can afford. Having a sale settlement all teed up without some certainty that the new house will receive adequate funding is a precarious position to assume. Getting the lender to pre-qualify your application gives confidence to the seller and some degree of assurance that you can secure the necessary financing when the time comes. It also prevents the seller/buyer from holding unrealistic expectations.
Keep Some Reserves for Emergencies
If you have this double-transaction worked out to the last penny then it might not be a wise move. Selling the house often entails settling for less than the asking price. Those assuming to use the originally listed price as a downpayment on the new home are then put in a quandary when the proceeds are $10-20,000 less than expected. This is why maintaining a reserve fund to buffer any reductions in the sale price is highly advisable.
Use Only One Realtor
The fewer moving parts in the apparatus, the simpler it operates. If you move relatively locally, employ your listing agent to double as the buyer agent for the new house. Having one coordinator makes the prospect of closing simultaneously much more likely. In the event that you move out of state, ask the listing agent for a referral at the new location. If they know each other, they will better harmonize the two deals.
