CNN/Money recently interviewed me for an article on selling your current home to buy a new one, and they took me completely out of context. (Someone really should fire Les Christie.) They did inspire me, however, to write some tips that homeowners can use when considering selling their current home as the means to purchase a new one, or moving up, as some call it.
It’s a good idea for folks who do have to sell to buy to start looking right after they have listed their home, or even before listing their home. It typically takes anywhere from three months to six months for a home to sell in the current market, or perhaps even a year if it’s a $1 million or more. If someone has looked for a new home during the time their current home is on the market, once their home is under contract for purchase it makes it easier for them to find one they like more easily in an area they like, that way they don’t have to rush in a panic.
Here are some tried and true tips you can use for when you need to sell your current home to buy a new one:
(1) Start looking in areas where you may want to buy your next home before putting your current home on the market. This will help you to get to know several areas and help you decide whether or not you would like to actually live there.
(2) Talk with your Realtor about your goals and see if they’re realistic. After all, you may not be able to get what you need from selling your current home to buy your next home, and you need to know that before putting your current home on the market.
(3) List your home for sale with a Realtor you know and trust. Your Realtor can help you sell your home while simultaneously finding a new home. Do not go with the one who offers to list it for the highest price, as this can often keep it sitting longer on the market.
(4) Do not wait until the last minute to search for your new home. Even before your home is listed for sale, it’s a good idea to have your Realtor show you homes in certain areas.
(5) Once you find the home you want to buy, discuss making an offer on it with your Realtor. Making your offer contingent upon the sale of your current home is the most common method of doing this, and while this isn’t a popular method to use in a hot market, it is very common in normal and slower markets. The market is normal at the moment, and I recently negotiated one of these contingency offers for clients of mine.
I don’t advise bridge loans if you can work out the contingent on sale of home contingency, and if you have a good Realtor it’s usually not a problem to negotiate this clause into the purchase contract. If you are moving up and using the equity in your current residence to do so, you may need a mortgage of some sort to buy the new home with, especially if it’s pricier.