January 25th, 2019 8:23 AM by Jackie A. Graves
of people find themselves buying and selling a home simultaneously, but knowing
that others have gone through the same stress does not make it one bit easier.
After all, the stakes are so high: If your buyer backs out, you don't have any
cash to land your next home! Or if your own purchase falls through but your
current home sells, you're homeless!
like walking across the Grand Canyon on a tightrope: The tiniest thing
goes wrong, and you fall.
turns out that most buying-and-selling mistakes are easily avoidable—or at
least predictable. Follow these eight tips to enter escrow with eyes wide open.
1. Waiting too long to
prep your home for selling
home needs a little work before selling. You might need to repaint some
scratched walls, fix broken decking, or add grout in a rarely used bathroom.
Don't wait until the last minute to kick-start this process, otherwise you
could wind up in a bind.
for example, one of the clients of real estate associate Kenneth Er. He was
trying to buy and sell simultaneously. Er advised him repeatedly to start
prepping the home, "but he kept pushing it off and pushing it off, despite
actively looking for a new home and submitting offers."
the client went under contract to buy a home, suddenly he and Er found
themselves rushing to list his existing home. When they finally finished
prepping, it was already October—precisely when the market was slowing down and
it became tougher to find a buyer.
advised him—and would advise anyone—to get the little projects out of the
way," Er says.
2. Skipping the backup
you're buying and selling simultaneously, the number of moving parts doubles.
And if any of those parts gets jammed, it can throw off both transactions.
example, Miami Realtor® Juan P. Rojas was recently involved in a three-way
transaction where the sellers of property A wanted to buy property B—and the
sellers of property B wanted to buy property C.
had to coordinate two closes and three different families moving in and out of
properties," he recalls.
worked out, but Rojas cautions: "Assume that you won't be
able to buy and sell at exactly the same time."
with that assumption, you better have a plan in place in case everything goes
wrong. Keep your emergency fund well-stocked. In a best-case scenario, you may
simply need a hotel for a week, but you may also find yourself looking into
short-term rentals. Have cash on hand—in addition to your down payment funds—to
survive the setback.
3. Buying too big
of the biggest mistakes that we see that simultaneous buyers and sellers make
is the same one that many first-time buyers make: They fail to get pre-approved
on their new loan," says Orange Country Realtor Jessica Althoff.
is essential, because it puts a stop to unrealistic dreaming by telling
you exactly what size of house you can afford.
assume that with a large down payment and increased income, they will
automatically qualify for a larger home loan," she says. "Many do,
but not as large as they think or wish. They begin the search and are
disappointed when they can't upgrade as much as they thought they would be able
4. Working with too
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, there goes the down payment on your new home.
yourself a cushion on what you need to sell your existing home for," Er
you're hoping to use the entire sale price as a down payment on another home,
move forward with the assumption your home will sell for less than expected.
of Er's clients set a purchase budget of $2.2 million. In order to afford his
new home, he needed to sell his home for about $1.3 million. Not only did he
exceed his purchasing budget, Er says, "We're unlikely to get $1.3 million
for his current home, due to the softening market and the time of the year.
He's stressed out and scrambling."
5. Failing to compromise
forget you're not the only human in a stressful situation. That person selling
your dream home? And the buyers under contract for your current place? They're
all probably stressed, too.
keep that in mind when issues come up—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.
mistake is expecting so much from the people selling the home, but not being
willing to give anything to the buyers of their own home," Althoff says.
"A little compromise goes a long way, especially when there are two
escrows (or more) on the line."
6. Using two different
real estate agents
this already messy process to get even messier if you're juggling agents for
your listing and for buying a new home. Simplify things by
using the same agent for both transactions.
would always prefer to handle both sides of your sale and purchase," says
agent Michael Pacheco.
"Having control and insight over both transactions allows me to make sure
that we close both homes simultaneously."
are two instances when you should not use the same real estate agent. If you're
moving out of state, look for a reputable buyer's agent in your new location.
If you're remaining in the same area, you may also meet and like an agent who
works exclusively with buyers or sellers — not both. In that case, ask for a
recommendation within your agent's brokerage so you can, at a minimum, keep
both transactions under the same roof.
7. Closing on a
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—"and never on a Friday," says Realtor Karen Choate.
because bank transfers can take a few days to go through. In order to ensure
there's money in your account when the time comes, buffer a few days to
8. ...or late in the
you're scheduling those closings, aim for the morning—especially on the sale of
your current home.
usually stop wire transfers by 3 p.m. in the time zone where the property is
located," says Choate. Closing in the morning allows extra time for the
money to hit your account.
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