Are the challenges for homeowners who need to buy and sell at the same time any different in a fast seller’s market with limited inventory than in a slow buyer’s market with abundant supply? A strategic approach to a simultaneous closing of your current home and subsequent purchase is essential in any market.
When there was scant available product and the pace of trading was fast and prices were accelerating steadily, it was prudent for sellers to wait before listing their homes as they feared they would be homeless if they sold too quickly before appropriate purchasing options surfaced. However, in a declining and slower market with an oversupply of homes, it’s unwise to hesitate. Few homeowners are in a position to buy first and sell second. Most need the sale proceeds to fund their next purchase. Additionally, they need financial staying power to carry two properties for an undetermined period. While all situations differ, and one strategy does not fit all, following are some observations and tips.
1. Step one in the process is to assess the market for both the property you’ll be buying and the one you’ll be selling. My team will help to evaluate online offerings and Sunday Open Houses for each price range. The Compass Collection tool organizes your search in one place, providing real time updates on price and status changes and encouraging collaborative comments so we can make decisions together.
2. In a transitioning market, it’s critical to price realistically. In my experience, if you overestimate your home’s value, you’ll lose time and ultimately money. We’ve had great success pricing properties on target to create urgency among buyers. We counsel homeowners to take the necessary steps to prepare the property for the all-important camera. Frequently we suggest virtual staging to accommodate budgets. Staged properties sell faster and for more money than unstaged homes, so listen carefully to staging advice. You’ll benefit from the Compass Concierge program where we not only formulate a tailored plan for cosmetic improvements to increase the value of your home, but we oversee its execution and pay all costs upfront, so you can defer expenses until you close and then reimburse us without additional fees at closing.
3. Have your finances in order. Check your credit and repair any delinquencies. To support any bid you make, you’ll need an up-to-date Financial Statement along with a lender’s preapproval if you intend to finance. Gather copies of recent bank and brokerage statements as you will need these for your loan and board applications.
4. A 90-day close date on the sale of your current home actually gives you 120 days to identify your next home since you can adjourn for an additional 30 days without penalty. Consider that for the short term, you may have to rent temporarily or move in with family. Also consider a post-closing holdover or lease back which would buy you more time on the purchase side, but better not to push this if your buyer is reluctant to accept this term. You do not want to risk losing your buyer. Later this year, Compass will announce details of the highly anticipated Bridge Loan Program so we can provide another measure of security to homeowners while their current home is being marketed.
5. Hire the same real estate attorney to handle both closings and discuss your timing concerns frankly, so they know when to speed up or slow down due diligence and contract reviews. In the best of all worlds, you’ll sign both contracts at the same time.
6. If you’re purchasing in a co-op, you will need to address the sale of your current apartment. At best, the board will want to see evidence that you’re in contract. Short of that, include a cover letter to explain your circumstances, highlighting any negotiations. Once you’re in contract, forward this additional new information to the managing agent if your application is still under review. When you’re invited to an interview, you can address whether your buyers have been board approved.
7. Think about the actual calendar for walk throughs and closings for both transactions. Your apartment will need to be empty and broom clean, so if you haven’t negotiated a holdover and won’t be able to move into the new place before you close, you may need to buy “storage in transit” from your mover to keep your possessions on the truck for several days.
Selling one home and buying another at the same time requires thorough planning and partnering with professionals who can take the lead in this complex dance. It’s a lot more than a two-step to the closing table.