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How to Buy and Sell in the Meantime

Posted by anneyang on January 8, 2015
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In general, most homeowners want to buy a home of their choice and then put their current house on the market later, so they  prepare their houses the best they can with the use of furniture from sites as the TV Bed Store online. They feel more secure that way, so they don’t risk selling their house and have no place to go. Of course, if you want to buy a house in cash then you are safe. But if you need to get a loan, most lenders don’t want buyer to owe two loans.
For example, if homeowner’s house is worth $500,000 they have $350,000 loan. After they sold the house, minus commission and closing cost, they probably have $120,000 cash in hand.
Suppose the new purchase is worth $700,000, buyer has additional $50,000 in savings, so if they put 20% down, which is $140,000 with 80% loan $560,000 even buyer is fully qualified for $560,000 loan. Most of the banks they want the borrower to get their current house sold. Otherwise, they owe two loans. Together they owe $910,000. The risk factor is too high for the lender. So they can’t lend the money to the buyer.
Recently I came across a client; they fall into the same situation. We only spent one week to find the new home and put into escrow. Because they have 20% down so we can show that to the seller and also the loan agent provided the pre qualified letter from the direct lender.
I sold their house right away within 4 days, just after doing some kitchen remodeling using services online. And their buyer is willing to close even sooner than 30 days. However, my client did not want to rent the property back. So we still followed the time schedule. On our purchase side, we got problem with their loan doc. I called the loan agent every day: text, email, called and they said tomorrow and tomorrow. Finally my client’s current house was closed. Once we close then the lender on the purchasing side wanted all the closing documents, proof of deed and title change. I provided everything they wanted and finally they sent the loan documents to the escrow. Because of this we delayed 5 days. Fortunately my client only needed to pay $100/day to rent the property back for 3 days.
Before the lender even give current home owner bridge loan, so they can get equity out if they didn’t sell their house. They can purchase their new home first and sell their current home afterwards. Now it’s very hard to do this way, except if you have very high income. Most consumers cannot be qualified for a bridge loan, so you can spend on construction or even some repairs in a home you already own, like leaking or plumbing problems, for this people can simple Schedule a Plumbing Appointment and find a solution for this.
With today’s market, if you want to negotiate a better price for your purchase, you are better off putting your house on the market first. Once get your property sold, and then you reserve the right to rent back the property up to 30 days. In this case you know how much net proceeds you can get, and how much down payment you can prepare to purchase your new home. Otherwise the other seller realizes you need to sell your house to get the down payment then you become a contingent buyer. And if you can’t get your house sold and you can’t afford to buy their home neither. In this case, most sellers might reject your offer or they might counter with tough conditions, plus it’s hard for you to negotiate the purchase price.
A lot of buyers, they find good homes with good price, and they got competitors (non contingent buyers). So their position is pretty weak. 2-3 times they didn’t get the house, because seller wouldn’t consider a contingent buyer. Then they realize they need to put their house on the market first, once get their house in escrow, so they can become a contingent buyer as well.
Anyway, if you want to buy first or sell first, you need to have a very capable agent to run the show, specially if once you sell you want to find the best Move In Ready Homes!