Many people need to sell their current home in order to qualify for the financing to purchase their next one. The challenges posed to our prospective buyers, who are also our would-be sellers, require difficult decisions to be made both in advance and during the process of buying and selling simultaneously. Be sure to explore all the options which exist for you and to carefully weigh the benefits and pitfalls that will influence your position.
If you sell your home and move into a temporary rental then you will be dealing with the inconvenience and expense of moving twice but doing so could provide you with a greater sense of control as well as to be more competitive with other buyer’s offers. More often people who are relocating from a distance select this option, but for a more local move people are less likely to go this route.
Visit with your lender to discuss how much money you will need to net from the sale of your current home in order to buy your new one and also how much you will qualify for after the sale. Work with a trusted REALTOR® to assist you with both the sale of your current property and the acquisition of your new one.
If you have decided to remain in your current home while searching for your new one, you’ll also need to decide at what point you’ll be listing it. You do have the ability to write offers contingent upon the sale of yours. If you find the home you want before you’ve listed, then you can submit your offer but will need to hit the market within five days. The seller will want the details surrounding the sale of your current property and will view whether or not it’s already under contract or not even on the market yet quite differently.
Any additional concessions such as a reduction in the purchase price, asking for assistance with buyer closing cost contributions from the seller and other requests may be more difficult to negotiate when your offer is already contingent upon a property to sell, especially if yours is not yet listed or under contract. Some of these seller concessions may be a requirement for you to obtain financing, so you may not have the option to waive them to make a stronger offer.
A property listed on the Maine Multiple Listing Service (MLS) may show a status of Pending Continue to Show and this allows sellers to work with an offer with contingencies (due diligence, a property to sell not under contract or other) but continue to show the property to prospective buyers. An agreement with a Kick Out Clause can be an uncomfortable place to be sitting for buyers who really want a home, but a seller may require this addendum to your agreement if you have a home to sell which isn’t under contract.
This addendum to your agreement allows the sellers to continue to work with other offers and if they receive another offer which they choose to work with after you’re under contract then you will be provided a day or two to remove the contingency of having to sell your current home and if you’re unable to, you are essentially “kicked out” of the contract and the new buyers take your place with a new agreement and go under contract. Some buyers are able to negotiate the removal of the Kick Out Clause at the time of going under contract, but usually at some sort of cost based on many factors.
Your motivation and what you will be willing to accept for offers will shift based on your current position as a seller. If you aren’t under contract to purchase your new home, then you will have a bit more leverage when working with incoming offers. Your negotiating position during the due diligence period will also be influenced by whether or not you are already under contract to buy your new home or not.
Listing your current property subject to you finding suitable housing with a timeframe, ranging from two to four weeks is one tactic used. You have the option to tell agents and buyers prior to scheduling a showing to view your home that you need time to secure suitable housing or you can disclose this during negotiations depending on the strategy you choose. Requesting a rent back option with the new buyers of your current home allows the closing to take place and for you to remain in the property for an agreed amount of time at an agreed upon monthly rental payment to the new buyers.
There are many moving parts which need to be choreographed in order to close on both properties the same day but with the help of a fantastic REALTOR® it can be achieved. Schedule a free consultation if you are curious about your own options.
Nicole Foster has been practicing residential real estate since 2006 and is a Broker with Locations Real Estate Group and is also a Windham resident and parent.