We are in a market where many of the home buyers on the market have either sold their previous home and need a replacement home, or hope their home will sell soon. A simultaneous sale and purchase can be stressful. This is a condensation of some of the pitfalls and mistakes to avoid in this type of transaction.
1. Waiting too long to prepare your home for sale
Every home needs at least a little work before selling. You may know what needs to be done, things like deferred maintenance, fresh paint, miscellaneous repairs, deep cleaning, getting the exterior in shape and pre-packing or getting rid of excess “stuff.” Some people wait until they find the perfect replacement home before they start the process. That is a bad idea for many reasons. It’s never too early to start on the process of getting your home ready for sale. If you plan to sell this year, start now.
2. Skipping the backup plan
When you’re buying and selling simultaneously, it can get complicated quickly and if one thing in one of the transactions goes sideways, both transactions can be affected. Jamie Wiebe has some great insights on preparing a Plan B in case everything goes wrong and the schedule goes off the tracks. Keep your emergency fund well-stocked.
3. Buying too big
This happens all the time. People overestimate their loan-ability. Just because you have been responsible and paid your existing home loan every month on time, don’t assume you will be able to qualify for and borrow more now to buy your dream home. Get pre-approved for your replacement-home purchase.
4. Working with too little cushion
You know what price your house should sell for. But what if the market softens? If you’re forced to take an offer that’s $20,000 less than expected, it could be a big hit on your down payment. Right pricing with the help of a seasoned real estate professional is essential.
5. Failing to compromise
Your concurrent sale and purchase will be stressful at times, but you are not the only person who is feeling stressed in your transaction. Stuff happens, for example, if the buyers need an extra week of escrow because there was an issue selling their home, or the sellers don’t think they need to fix a leaky pipe for you. There are going to be sticking points between the parties.
6. Using two different real estate agents
When you are selling your home to buy a replacement home, expect this already complicated process to get even more so if you’re juggling agents between your home sale and your home purchase. Simplify things by using the same agent for both transactions. Each transaction already will involve up to 50 people, and one experienced Realtor orchestrating the process on your behalf will avoid many problems, especially if you want to have simultaneous closings of escrow.
7. Closing on a Friday
While you should work with your agent to determine the best timing, you’d ideally want to finalize the sale of your current home first, and then close on your new one. Try to aim for closings within two or three days of the other if not concurrently, and never close multiple escrows of a transaction on a Friday.
8. Not trusting your team
I mentioned before that in every home sale or purchase transaction that there are approximately 50 people involved in the transaction. Hopefully for you, these people work together like a well-oiled machine with one general purpose in mind… making it happen for the buyers and sellers. All of your questions and concerns are important, and your Realtor is your guide through what may be one of the largest financial decision of your life. Good communication with your Realtor builds trust, so be sure your Realtor is a good communicator.
Ray “the Realtor” Kutylo is the team leader of the SCV Home Team at Keller Williams VIP Properties. The Team brings experienced and professional service, commitment and value to every transaction, whether you are a home buyer or seller. Ray can be reached at (661) 312-9461 or by email at [email protected]. The views expressed are his own and not necessarily those of The Signal. CA DRE 00918855