Here’s the ideal situation: you and your agent coordinate the sale of the house you are currently living in with the purchase of your new home.
Today, the biggest objection to putting a house on the market is being able to find and close on your new home. You may be concerned that you won’t find the perfect next home, or that you won’t be able to make an offer and win, or that your financing won’t move smoothly.
In a fast-paced market, you are most likely confident that you will sell your current home. You are likely to have multiple offers – at or above list price – within a matter of days. And, it won’t be a problem to find a new home, one that you will love even more than the one you are selling.
Having your offer on a new home accepted and timing the close with the sale of your current home is the real challenge.
What if my house sells so quickly I end up homeless?
The most common question agents have been hearing this year is, “I’m afraid our house will sell so fast and we will be homeless.”
Whether you are selling your home to purchase a larger home, downsize to a smaller home, move into a condo, or relocate to another community, fear might be stopping you from making the decision to list your home.
“In a quickly moving market such as we have today, a pre-approval is critical. Not only will you know how much you can afford up front and an idea of funds needed to close, but it also provides stability to your offer,” advises Tara Jones Fitzgerald, Mortgage Loan Originator with HomeStar Lending. “Sellers are more likely to take your offer seriously if they know they are dealing with a qualified buyer. A pre-approval will also allow you to home shop with peace of mind, knowing you can submit an offer on-the-spot with the confidence of knowing your financial situation up front. It take a lot of guess work AND stress out of the equation.”
When you put your property on the market and begin shopping for the home of your dreams, you need to find a new house without sacrificing your negotiating power. If the closing date on your home for sale is looming, you will start to feel the stress of pressure to buy.
Some of that stress can be mitigated with a 45-60 day escrow, but you don’t want to walk away from the best offer because you don’t have a new home to close on and work within your buyer’s schedule.
Janine Pugh, Director of Client Development at KBT Realty Group, agrees that getting pre-approved for a new mortgage is one of the most important things to do before listing your current home for sale.
“The biggest thing, in my opinion, is that sellers get pre-qualed so they know how much house they can purchase in their new location.” Janine says. “Sellers shouldn’t assume because they already have a mortgage that they’ll be able to get another one. It’s all about debt-to-income, and credit. A seller needs to know that they can purchase in their next location.”
Your agent will be able to help you explore your options in the unfortunate event of not finding a replacement home before you actually close on your current home. If you are pre-qualified for a new mortgage, you will have more options.
You might be able to rent back your newly sold house, store your possessions and move in with relatives, or secure a long-term vacation rental.
There are other options for the many scenarios you might find yourself in if your house sells in a matter of days. With a strong mortgage prequalification and a knowledgeable agent, you should be able to coordinate both your home sale and home purchase with as little stress as possible.