Similar to a game of chess, the first steps taken when buying or selling real estate can ultimately determine how successful you are in accomplishing your goals. When we meet with clients who are about to buy or sell a home, the stress and apprehension is often obvious. This is why you should be sure to interview different REALTORS® until you find the one that inspires confidence and eases that stress, if only a small amount.
“What to do next?”
There are two basic scenarios:
1. Put your home up for sale and get out there house hunting in the hope that you are able to find a home you like.
2. Get your home ready for sale but do not list it until you find “your new home.”
If only it was that simple! There are various possible outcomes for both scenarios. For example, in scenario 1, let’s suppose that your home is up for sale and on day 3, a fantastic offer comes in with a closing date in 70 days. “What to do next?” Well, depending on what you are looking to move to, you have a few choices. You could add a relocation condition into the offer which allows you a few days to find ‘suitable accommodations’. Another question to ask is if what you are looking for can be found and closed within those 70 days. You may want to avoid that course of action if what you are looking for is in short supply. Another option some rely on is moving in with family or friends with belongings in storage to bridge between two closing dates.
A REALTOR® should be able to guide you through these sometimes stressful times with a plan tailored to your needs.
Scenario 2 is a common plan as well. If your home presents well and is realistically priced, making an offer conditional on the sale of your home is an option. The seller will likely insist that you promptly get a for sale sign up in your front yard. The main challenge and cause of stress, with this approach is what if someone else wants to buy that house? If a second offer comes in on that property that is not conditional on the sale of the buyer’s property, then you are likely to be served notice to remove conditions. Again, “what to do next?” Well, you can either remove all conditions and ‘firm up’ the deal or get a mutual release from the agreement and let the house go. If you firm up be aware that you are taking the risk that your home will be sold by the closing date. Are you in the position to temporarily own two homes?
The “Equity Escape Hatch”
If you are fortunate enough to be mortgage-free, or close to it, depending on the purchase price of what you are buying, there are a few mortgage and financing options that can help you avoid some of the stress of the more traditional methods. Many people are familiar with Bridge Financing however Equity Based Financing is a lesser known option that can help a seller purchase a new home without being rushed or “served notice” by someone else. Sami El-Farram, Mortgage Broker with TOTAL MORTGAGE SOURCE360 adds “Equity based lending is an option that most local lending institutions won’t even consider offering to their clients, but in most cases will be less expensive than traditional bridge financing. It also allows the client, as the seller, the opportunity to sell their home with less external pressure. Equity based financing is basically using the equity in the home to temporarily finance both properties until the clients home is sold. It sounds expensive and complicated but my clients are often surprised at how easy it is!”
Has this helped? Would you like further information tailored to your specific needs? We’d like to hear from you! Feel free to call or send us an email with any suggestions or ideas of your own.
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