When you first purchased your home it met your needs and budget, but life (as it always does) has changed. Maybe you have a different job that is located on another side of town, or your family situation has grown from 2 people to 4, or you now have a much higher income and would love a nicer home to reflect your current taste. The point is that the home served its purpose but it is now time to move on.
What you need is a plan to get from point A (your current home) to point B (the new home that meets your current wants/needs). Hiring an awesome Realtor to guide you down this path is highly recommended since it can be complicated and overwhelming!! Below are the most common strategies to accomplish your moving goal.
1.List your current home then look for a new one once your home is under contract and write an offer contingent upon you closing on your home.
One of the benefits of this strategy are that you know how much you will be getting in proceeds (since you’ve already accepted an offer at a certain purchase price). This is extremely helpful when budgeting and planning for the next home. The other positive is that when you do find the home that meets your needs and get an offer accepted, you will not have the stress of putting your home on the market. That step will be behind you. The risks that come from this strategy are that you may not find the right home in the timeframe that you have negotiated before closing. This may cause a double move and the need for temporary housing. Another con is that it is harder to get an offer accepted that has a contingency in it, even if it’s just to close on your home. Sellers like clean offers and the less risk the better. Another factor to consider is the chance something falls through on the sale of your current home. You risk losing out on the new home and having to start all over from square one.
2. Sell your current home then find a new home after the current one closes to eliminate the need for a sale contingency.
This one can sound super scary. Nobody wants to risk being homeless. There are many ways to make this a smooth transition with extended possession after closing or finding a temporary place to land (mom & dads, short term rental, temporary RV living…). The major benefit is that this strategy will give you the best buying power in the market. When you have your proceeds from your sale and do not have the risk of having to sell your home sellers will favor your offer over those that submit contingent offers.
3. Buy your new home (cash, bridge loan, new mortgage), then list and sell your current home.
When you decide to buy the new home before selling, the stress about finding the “right one” is minimized since that step is first and you do not have the pressure of a short timeframe. This strategy will also give you the opportunity to declutter the current house by moving items to new house which can help with the staging process, and you will not have to worry about finding temporary housing or moving twice. Of course there are risks involved. These include: being unsure of the exact proceeds from the sale of your home (the market will determine the ultimate sale price despite what you see in the sale data), you won’t have the cash from home sale for down payment, and perhaps this biggest concern is that you may have carrying costs and run the risk of having 2 mortgages.
4. Look for a new home. Once you find the right home, write an offer contingent upon you selling your home. If your offer is accepted, list and sell your home.
This strategy is the most challenging to execute smoothly, but it absolutely can be done! The reason that buyers choose to use this strategy is that they are not comfortable with the risk of selling their home without having another home lined up, yet they cannot afford and/or are not comfortable with buying a home before selling their current home.
The stars all have to align to pull this off. First you have to find a home that you like and write an offer attractive enough that the sellers are willing to accept your offer with this contingency. After that you will have to get your home on the market in a very short period of time and position it in the market for a quick offer, and finally we work hard to get everything done and close on the sales on both homes.
Which strategy is best for you?
The current market conditions and your personal situation will help you determine this. Hopefully you will be able to find a way to balance both at the same time (or a short window). If this is not possible, you need to decide which risk you are more comfortable with – owning zero houses (selling your home first) or owning two houses (purchasing next home first). Again, I cannot stress enough… finding an experienced and professional Realtor to guide you through this process is SO important!!