Your first home was probably one of the most exciting purchases you’ve ever made. But as years go by, you and your family may be outgrowing it. When you’re no longer happy in your home, it’s time to start looking for new homes for sale. But how will you buy when you still have your primary residence to sell? This move-up guide will help you make solid decisions when it comes to buying and selling.
How to Sell and Buy at the Same Time
Move-up buyers have two tasks at hand: selling the home they currently have and purchasing a new property. This is sometimes known as synchronous selling, and it can be tricky, especially if the timing isn’t ideal and you find yourself with two mortgages or no place to live.
To successfully buy and sell simultaneously, it’s important to plan for every scenario. For example, do you know what your funding options will be if you’re unable to sell and need to come up with cash for the down payment on your new home? Or do you know where you will live if you’ve sold your home but have not yet found the perfect home?
Tips such as securing a storage facility to put the majority of your belongings at the beginning of the process and having your realtor keep a lookout for short-term rentals you may be able to move into are helpful when planning for contingencies.
Decide What You Can Afford
A common mistake of move-up buyers looking for new properties is overestimating how much they will be able to afford. Many of these buyers either overestimate how much they will get out of their current home or simply overlook the fact that a larger, nicer home will naturally come with more expenses.
Sit down with both your realtor and your mortgage lender and be honest about the state of your finances and how much you can reasonably afford on monthly mortgage payments and other bills. Keep in mind that the amount you are preapproved for with a mortgage lender is not the same as what you can afford. A mortgage lender will approve buyers for what they anticipate they can afford, not on what they can afford, when they factor in all their bills and monthly expenses.
When you’re honest with yourself and the real estate professionals you work with, you can make a wise financial decision regarding your new home.
Find Out How Much Your Current Home is Worth
If you haven’t yet sold your current home, you need to do some research and find out how much it’s worth before you begin the buying process. The value of your home will depend on numerous factors, including the current Chicago real estate market, what similar homes are selling for in the area, what improvements you’ve made on the house, and more. To understand what you will potentially get out of your home when you sell it, it’s best to work with a professional real estate agent who can perform a comparative market analysis and give you a reasonable number.
Decide on Financing
Financing for a move-up buyer will depend, in large part, on the timing of the buying and selling process. Here are the two scenarios you may have to deal with:
◾ You sell your home before you have settled on a new one to buy. This is the ideal scenario when it comes to financing. You should be able to use the equity from the sale of your home to use as a down payment on a new one and avoid private mortgage insurance.
◾ You find a new home before you have sold your current home. In this situation, you’ll need to come up with the money for a down payment. The most common options are securing a home equity line of credit (also known as a HELOC), doing a cash-out refinance, or selling assets such as investments, precious metals, or classic cars and using the money for your down payment.
Consider New Construction
As mentioned previously, inventory is currently low, and competition is high in Chicago. Many move-up buyers feel stuck because, while it may be easy to sell their home during this type of market, they can’t find any existing homes that match their needs.
Buyers in this position should realize there is another choice for finding a new home: building their own. When you work with a home builder to construct your new house, you don’t need to sacrifice anything on your wish list and don’t need to worry about the home’s condition.
Keep in mind that having a home built is not a quick process and that you may need to secure a short-term rental while you wait for your new home to be completed.
Work with the Right Real Estate Agent
When you’re ready to move up, the best piece of advice is to work with an experienced local real estate agent who can help you with both the buying and selling process. A good agent can assist with all of the following:
◾ Identify what your current home is worth and price it fairly.
◾ Help you find a home or a home builder. Agents with good connections have access to off-market listings as well as people who are getting ready to list and or looking for homes like the one you’re currently selling.
◾ Help you decide which offer to accept on your current home.
◾ Assist you in putting together an offer for your next home.
◾ Guide you through the entire buying and selling process.
Ready to leave your old home behind and move into one that better suits your current needs? From Ukrainian Village to Lincoln Park real estate, work with experienced real estate agents like those at the PCR Group, so you have a professional guide through the selling and buying journey.