It’s been a sellers market for awhile now in Michigan and throughout the country. This comes as great news to sellers, but many sellers are also looking to buy, which has them wondering if they will be able to find a home in this tight market.
In a perfect scenario, you could sell your house, and use any built-up equity for a down payment on your next home – in that order. But realistically, there could be some overlap between the two transactions. Here are some tips for those who will be buying and selling a home simultaneously.
Determining Your Financials Can Help With Strategy
Probably the plan with the least amount of risk would be to first secure your new home and then list your old home. This is especially true in a sellers market since chances are, your old home won’t stay on the market very long. Consult with your financial advisor and home lender to see if this is feasible first. Part of qualifying to own two homes involves showing you can afford both mortgages. You may be required to show that you have six months of payments for both homes in cash reserves. So consider this before depleting too much of your savings for a down payment.
If carrying two monthly payments is too much of a financial strain, you could always make a contingent offer on a new home. The condition being, you can only purchase if your current home sells. If it doesn’t sell, then you won’t lose your earnest money. The only challenge is that this weakens your offer in an extremely competitive market.
Instead, you might want to consider making a different contingent offer with non-refundable earnest money. Hopefully that will give the seller incentive to wait until you sell and help you win the deal.
If you prefer to sell your current home first, having a backup plan can help relieve the pressure of being rushed to find the best home. For example, is there a home you can rent month-to-month or on a short term lease?
Always Allow for an Extra Cushion
When it comes to situations like this that involve risk, remember to leave enough room for error.
Yes, it is a sellers market, but what if you still don’t get your asking price? If you’re relying on every bit of your sale as a down payment on the new property, assume the worst case scenario that your home will sell for less. If you still receive asking price, you’re ahead of the game.
Use the Same Agent for Both Transactions
Unless you’re selling your home in Michigan and then buying another out of state, using one real estate agent for both transactions can help you buy and sell simultaneously. When you’re trying to coordinate both a sale and a purchase, it’s crucial to have an agent who understands all the different moving parts in this timely situation.
About Michigan Home Lender, Julie Krumholz
With 35 years of industry experience, Julie Krumholz has worked in nearly all aspects of mortgage banking.
Throughout the years she has worked in processing, closing and loan origination, underwriting, QC auditing and has even co-owned a mortgage brokerage firm.
If you are looking for an experienced Michigan home lender, call Julie from SuperiorNational Bank today at: 586-382-5482 and let her help you navigate through the loan process and answer any questions you may have.
