If you are looking to sell your house and buy a new one right away, then you are in for quite a ride. You probably expect to sell your old home and then, immediately go and sign off on your new dream house.
This would be the case if we lived in a property management utopia, but in reality, there are plenty of things that can slow down your process or make you lose money along the way. You are about to deal with the dreaded property chain, so you will need a few tips to make your journey more efficient, both in terms of duration and finances. Here are the 8 essential ones:
1. You must have your property valued
The very first step of this intricate process is having the home you want to sell valued. Don’t build your plans on what you think your property is worth because it might lead you in the wrong direction. If you over-value your home, then you are looking at some extra mortgages for your new one.
But, if you under-value the property you want to sell, then you may realise that you missed out on some excellent properties because you believed them to be outside your budget. Your best option is to work with a professional and have your house valued correctly. They’ll be able to provide you with an accurate assessment of what your home is worth in the current real estate market.
Then, you can build realistic plans for your new home based on facts, not wishes.
2. Work out how much equity you have in your property
If you’re planning to sell your current home and use the proceeds to fund the purchase of a new home, and assuming you’re carrying a mortgage on it, you will need to work out how much equity you’ve built up in the property.
That will give you an idea of what your real buying power might be in the current property market. The good news is that you don’t need to study to be an accountant to understand home equity. In fact, working this out is simple.
Just take your home’s valuation (from step 1) and subtract any outstanding mortgage or home equity loan balances. The number you end up with is how much cash you should have on hand after the home is sold and the outstanding loans are paid.
Depending on when in the real estate cycle you purchased your home, you might end up with a tidy profit. If not, you may be left with little but what you’ll need as a down payment on your new home.
3. List your current home for sale
Before you can start the process of finding a new home, you’ll have to put your current home on the market for sale. To make sure you get an offer that represents the home’s true value, make sure to pay careful attention to how you stage the home for potential buyers. If you do it well, you will not only improve the odds of getting a satisfactory offer on your home, but you will also help make sure your home sells quickly.
Since you’re trying to make the timing work to your advantage between selling your current home and purchasing a new one this is an essential step. Once you’ve started the process of selling your current home you can move on to the business of finding a new one.
4. Work with a mortgage broker
When selling your house, you can transfer any mortgages you might have on it to the new property you are buying. Moreover, you can change the terms of the mortgage to suit your current needs.
If you work with a mortgage broker, you will get some much-needed assistance with this difficult process and you may even discover that there are many more possibilities than you thought when it comes to mortgages, which could help you tremendously in choosing a better house to buy.
5. Find your new house and do all the math
Once you have some clear numbers to guide you, and your current home is on the market, you can begin searching for your new home. Be realistic and analyse all of your options, both in terms of the location of your next house and the finances behind the purchase.
It is up to you if you are about to be left with money in the end, if you’re going to break even, or if you are going to start a line of credit. Depending on where you want to be, choose the best house for you. Explore your options and enjoy the process. Remember that you are buying a house where you are going to spend the next chapter of your life, so it is a major decision that you’ll be making.
6. Begin the purchase process
When you have found the home of your dreams and you want to begin the purchase, it’s best if the sale of your current home is complete or at least entering its final stages. If it is, you should be well-positioned to start the process of purchasing your new home. If it isn’t, not all is lost, though.
You may be able to work with the current owner of the home you’re looking to purchase and work out a pre-contractual stipulation that states that the sale of your existing home must be completed before your purchase process commences.
While this does add a layer of complexity to the purchase contracts, it is sometimes the only way to prevent someone else from swooping in to buy the home you’re considering while you wait for your current home sale to complete.
7. Organise the communication
Having to work with so many people may seem daunting at first, but everybody is actually there to help you succeed. So, use this in your favor and optimise the communication with the property analyst, the real estate agent, the mortgage broker, and anybody else on your team.
That’s right, you are a team! You have to be assertive and point out exactly what you want to get from your new house. Hear out what each of them has to say, but never lose sight of your own plan. After all, it is your dream house you’re buying. The same goes for the potential buyers of your old house and the seller of the house you want to buy.
8. Organise the moving process
An essential element to keep in mind is the timeline of the moving process. Once you have a buyer for your home, you will have to move all of your things out of your old house.
The issue will be to figure out where you are moving it to. You have to be prepared for the possibility of having to store your belongings somewhere temporarily. If so, your best option is to rent out a storage unit. Have some options ready for that before everything becomes urgent, even if you may end up not needing it in the end.
Another issue you may deal with is having to find a place for you to live, also temporarily, until you can move into your new house. This could be a matter of days, but it can extend to a few weeks, so look into some hotel options to be prepared.
As you can see, there are plenty of things to consider when selling a house and buying a new one at the same time. If you follow these tips, you will have all the chances to conquer the property chain and get a good deal on both houses.
Good luck with the move!