Ah, to be a first-time home buyer again - it seemed much easier when you weren’t already carrying an existing mortgage. But times change, and perhaps you want a different location or a bigger (or smaller) home.
So how do people do it? You know things are going to get tricky. If you are like most people, you’ll have to sell your home in order to buy a new one—adding a whole layer of anxiety to what you already know is a stressful process.
In an ideal world, you’d buy a new home, move, and then, and when all the dust settles, deal with the turmoil of selling. But for most people, that’s unrealistic and it will cost significantly more, since you’d be paying two mortgages.
But there is a way to do this and you’ve come to the right place, as I have helped many in this exact situation. The first step is to have a trusted agent prepare a market analysis of your current home. It’s important to have someone with good skills – because if you base decisions on too high a sales figure, your entire plan could go haywire.
Discuss with your agent your potential sales price and then talk to a trusted lender about the plan. Your lender will calculate your net proceeds of the sale toward the purchase of your new home and can let you know what loan amount you can qualify for. Once you know the price point that your new purchase should be in, you can look around to be sure that moving is feasible and achieves the goals you have in mind.
Properly preparing your current home for sale is the next step. You want top dollar so you can afford the next house. Make sure the house is in tip top shape and cleaned from top to bottom, inside and out. Your agent should advise you and once work is done, can list the house For Sale, schedule Open Houses and while you are waiting for an offer (hopefully it’s not too long if you’ve priced the house right) you and your agent should be out looking for the “replacement property,” as we call it.
Everyone’s worst fear is ending up homeless, but let me explain how you’re protected by your savvy sales agent. First of all, your house is listed subject to you finding a replacement property. Granted your buyers won’t like to see this, but it’s important to you. This is why you need to be out house hunting and identifying potential homes to serve as your replacement property. You want your buyers to know that you are serious about selling. You can also ask your buyers for a rent-back agreement for a short period of time. This can relieve some of the pressure of finding a new home, giving you additional time to house hunt, but in Hawaii – with the high number of VA buyers - don’t count on getting more than 30-60 days.
It’s important to get your house into escrow. Once you have a closing date in black and white, sellers will take you seriously when you make an offer on their home. You cannot simply say you “have a home to sell” or even a home “listed on the market.” You have to show that it is SOLD and already in escrow with a buyer.
Once you’ve found a replacement house to buy, your agent should write into your purchase contract that your new home purchase be dependent on the successful closing of the home you are selling. If the home is vacant or about to be vacant, you can also request early occupancy. This allows you to get moved out of your house a bit more leisurely, rather than having to rush. For all of this to work and come together to your best benefit your agent has to understand your specific particulars and work extra hard to ensure the buyer of your property is very well-qualified because if your buyer fails you – you in turn have to cancel or delay your purchase. That is not a good scenario after all the hard work to bring you to this point.
Pick an agent that you trust and have full confidence in. You don’t want to let fear push you into a bad decision. It’s important that your agent not divulge too much information to your potential buyer’s agent. If the other side knows you are a bit desperate to sell – they may try to take advantage of that, by asking you for costly repairs as a condition of closing, for example.
You also don’t want to feel rushed into buying because you need to buy a house right now. At the same time, you will have to be realistic and it’s good to have a trusted, experienced advisor to bounce your thoughts and feelings off of. Buying a house is a big deal and you want to find the “right one.” It’s kind of like finding your spouse. They might not be perfect, but they are the right one for you!
It’s important to have a backup plan, just in case you have to store your stuff and stay with friends or family or rent something temporarily. You need an agent who will fully strategize with you to ensure the process goes as smoothly as possible. It always has for my clients and I intend to keep it that way! For more information or the names of lenders that I recommend, call me at (808) 381-6848.