Goodspeed: Balancing selling and buying homes
QUESTION:My wife has taken a new job in Hopkinton that will start May 1. We own a home here and want to purchase a new one in that area. Buying and selling at the same time seems a little complicated. How does it work?
ANSWER: Yes, selling a home and buying a new home at the same time is complicated, especially if you need the proceeds from the first home to buy the second one. Timing is critical. Here are some considerations:
First, estimate how long it will take to sell your current home. Using MLS data, you (or your realtor) can estimate how long it will take to sell a home comparable to your current one.
In a strong seller’s market, this time could be a matter of days or a few weeks. In a slower market, it could take several months.
Besides the MLS data and your realtor’s knowledge of your local market, you will also get an idea of how long it will take to sell your home right after it is listed by the amount of traffic you see in the first few days.
After you list your current home and estimate how long it may take to sell, begin scoping out your new community. It takes a lot of luck and coordination to simultaneously sell and buy. Using the same real estate firm to handle both transactions is helpful.
If you are selling in a strong market, take advantage of your bargaining power as a seller to negotiate more time for your current home to close while you work out the timing of your re-purchase. If the typical closing time is 30 days, ask for 60.
You might also be able to accept an offer on your current home contingent on you getting a purchase agreement by a certain date on a new home. As a buyer, you might be able to make your offer on a new home contingent on you selling your current home by a certain date.
You may also be able to take out a “bridge” loan. Bridge loans were short term loans to be repaid when the borrower’s first home is sold. Bridge loans, however, are hard to get.
A better plan might be to use the proceeds of an equity loan on your current home to finance the down payment on your new home. But sellers must apply for home equity credit before they list their home for sale because lenders will not usually write loans on properties that are for sale.
Linda Goodspeed is a longtime real estate writer and author of “In and out of Darkness.” Email her at: email@example.com.