6 Steps to Buying a Home Before Selling a Home
Many homeowners are interested in selling their home, and want to down size, up size or re-invest in an opportunity. Some homeowners hold off on selling their home due to fear of not finding a new home before settling on an exsiting home.
You'll need an effective plan of action to secure a new home before you sell! Consider these smart strategies before listing your home for sale.
#1 What's your home worth?
You'll need to find out what your home is worth? Depending on your loan to value (the difference between what you owe on your mortgage and the your home value), you'll be able to determine how much equity you'll be able to roll over as a down payment on your new home.
#2 Contact a local real estate agent
The best resource to start with is a local real estate agent. Real estate agents are a conduit of resources in the home buying process. A real estate agent will help you understand your home value, set realistic expectations for selling your home or condo, help you research homes for sale, and guide you to additional resources for creating a smart strategy for buying a new home.
#3 Get pre-qualified for your next purchase
Sometimes the dream of buying a home may be limited to the amount you're able to finance. By contacting a loan officer or mortgage lender, you'll be able to find out if your credit needs some work, and if you're qualified to buy.
#4 Understand potential tax-exemptions and/or consequences of selling your home
If you have equity in your home, you could have tax consequences on your profit. If you own an investment property, you may be able to take the proceeds from the sale and buy a new investment property. This process is referred to a 1031 exchange in real estate. If your plan is to buy a new property after selling your property you may want to consider buying with a 1031 exchange. Consult with an accountant to plan for any potential tax consequences and programs available.
#5 Research real estate and homes for sale
You'll want to get a sense of the homes available for sale. Get to know homes that fit your criteria, and know whether you have the potential to buy something worth-wild in your market. The sooner you start researching the better prepared you will be when it is time to buy.
#6 Making an offer before you sell your home
When researching homes for sale that fit your next home criteria, you can still write an offer. This may be done by including a 72 Hour Kick Out Clause with your contract. This allows a seller to accept your offer, but continue to market their home for sale. This addendum gives the seller an advantage because it could allow for the seller to find another buyer with an offer not contingent on the sale of another property. Sometimes sellers can be hesistant to accept an offer contingent on a home selling without the 72 hour kick out clause. This clause also protects you as a buyer, because if your home does not sell, you can walk from the offer after the contract expires.
Interested in selling your home and buying a new home?
When you contact me, I'll discuss an effective plan for your unique situation.
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