Client guide: How to sell your house and buy a new one
As a real estate professional, you have a good grasp of the ins and outs of residential sales and purchasing. But your clients may not.
Whether they’re first-time homebuyers, haven’t sold or bought a home for many years or just have a question about a complicated part of the process, clients don’t have the in-depth knowledge of real estate that you do. That’s why they’ve chosen to work with you, after all.
Consider using this article as a guide for your clients – you can share relevant parts of the text to answer specific questions or most of the piece as a primer for selling a house and buying a new one.
How do you buy a new house and sell your old one?
Buying a new home at the same time you sell your old one is a common process. People who own homes and want to move, whether locally or across the globe, regularly and successfully complete this task.
Your real estate agent is a valuable asset during this time – don’t be afraid to turn to them. Bankrate suggested using the same agent for the sale of your current home and purchase of your next one to make things more direct and simple.
The financially conservative workflow for selling and buying in a short time frame involves selling first and scheduling both closings on a tight schedule. You should aim to close on the sale of your existing in the morning, or a few days before, and then have the closing for your sale afterward.
Finishing your sale first helps you avoid the risk of paying two mortgages at the same time, which can happen if the closing on your sale falls through but the purchase of a new home goes as planned. Redfin suggested listing your home and waiting for a firm offer on it before getting too deeply involved in the purchasing process.
If your finances will support paying two mortgages for an indefinite period of time, you can also sell first, then move into a short-term rental or similar accommodations. From there, you can seek out the home of your dreams.
Whether you choose to sell or buy first, make sure you have a dependable real estate agent on your side and a clear understanding of your finances. Consider your income, expenses, debt-to-income ratio and other important financial factors before moving forward. This is crucial for qualifying for a new mortgage, among other vital considerations.
How do you build a house without selling yours first?
If you plan to move into new construction and don’t want to sell, you’ll need the funds to pay your current mortgage as well as address the costs associated with construction (if the house is built for you personally as opposed to part of a development) and the purchase itself.
If your finances are stable enough to address the costs of owning your current home until the new one is completed, or if you can get the assistance you need from a lender, you can move forward. If this plan is too financially taxing, you should look for other options. That can include moving into a modestly priced rental until construction is completed.
Can you rent out your old house and get a 2nd mortgage to buy a new house?
While the circumstances will vary based on finances, the terms of your current mortgage and the willingness of lenders to work with you, you may be able to rent out your current home while moving into and living in a new one.
SFGate highlighted three major issues that can prevent you from taking out a second mortgage while renting your current property, whether you want to do so indefinitely or just until it’s sold:
- Mortgage limitations: Your mortgage may include an owner-occupancy rule that requires you to live in your current home for a certain amount of time. If you have already moved past the time limit or your mortgage doesn’t include such a clause, it’s not an issue.
- Financial limits set by lenders: Your debt-to-income ratio should be at least 36-50% for reputable lenders to consider issuing a second mortgage.
- Minimum equity: Lenders also look for about 30% equity in your current home as a baseline for approving a second mortgage.
Advances for real estate agents
If you have clients buying and selling homes at the same time, you know things don’t always go as planned. Delays in the closing process can mean an expected and important part of your income won’t arrive as planned.
Just Commission Advance offers cash advances for real estate agents to help smooth over their budgets and allow them to focus on their clients and properties instead of their finances. Apply for your advance today.