You purchased your home in Richmond VA several years ago - but now it is time to sell! There could be lots of reasons for selling - upsizing, downsizing, moving from the city to the county, you got married and want to buy your own place together - whatever the reason is, this causes a lot of stress and lots of questions!
Rest assured, this happens all the time in real estate! And many of my clients look back longingly to those days when they were a first time homebuyer who didn't have a house to sell! But having been in real estate for over 20 years, I can assure you this happens a lot more than you think! And, whether you are buying and selling in a seller's market or a buyer's market, buying a home at the same time you are selling a home in Richmond can be done!
So, when it is time to take that next step, the first thing you should do is talk to a Realtor! Your Realtor will be able to help you decide which tactic is best for you and your family!
Some questions to ask?
Do you need to sell your home first in order to buy your next home?
Many people need the equity from their home in order to be able to buy another home! Many people need to sell their home first because the lender says that they may not qualify carrying two mortgages at the same time! And many people are just not comfortable carrying two mortgages at the same time, even if they can qualify to do so!
But there are some solutions!
* If you can qualify to carry two mortgages at the same time (the one on your current home and the one on your new home), check with your lender to see if it is possible to recast the loan once your current home is sold. This will allow you to have the lower mortgage payment that would have been possible from the beginning if you had sold your home first. Remember, however, not all lenders will do that, so you need to make sure that the loan & lender you use for the new home purchase will allow this to happen once your current home is sold!
* If you have a lot of equity in your home, perhaps a home equity line of credit (HELOC) will allow you to tap into that equity to put down on the new house. Again, you need to be able to qualify for the current mortgage, as well as the HELOC and the mortgage on the new house. But if you are able to qualify, this could allow you to use a large portion of your equity towards your downpayment on the new home, and then pay off the HELOC when your current home is sold!
* If your home is not worth as much as you currently owe on the property, an alternative to doing a short sale or allowing the home to go into foreclosure may be to rent out the home. You may even consider this if you don't want to sell your home at this time for whatever reason. Once you have a lease that is signed, the lender may be able to approve you for a mortgage. Again, check with your lender to see if this is a viable option for you!
* Another option is to write an offer on the house you want to buy and making it contingent on the sale of your home! This is an option, but, in my experience, I have found that when the house you want to buy is in one of the neighborhoods that sells as soon as homes hit the market this option may actually be hurting your chances of getting the home you want! It is another contingency that may not work, especially if there are multiple offers on the house! Or you may get a seller who just doesn't want to accept an offer with a home sale contingency in it!
If you do decide to buy a home first and then sell your current home, then you need to make sure that your home is ready to go onto the market immediately (this means that it is staged & any repair issues you are aware of are taken care of right away) and it is priced to sell!
Sell Your Home First, Then Buy A Home
For many people, however, the uncertainty of making sure that their home is sold first before they take on another mortgage on another house is uncomfortable! Here, the strategy may be a little bit different and the options are different!
* First, get your home ready to put on the market! This means that you will need to do everything to make sure that your home is in staged condition and any needed repairs you are aware of are taken care of. I normally will recommend that we bring in a stager to help the sellers get their home staged, painted if needed, new flooring put in if needed and closets thinned out! I will also recommend that the sellers also do a home inspection and that any repairs noted on the inspection report are taken care of before the house even goes on the market! Why? Because if you want to get the home sold for top dollar, then it needs to be in top dollar condition! Buyers today will not offer top dollar for a home unless they feel that they are getting a home worth the money they are paying for it!
* Second, don't start your search until your home is ready to go on the market! Why? Unless you are willing to possibly take on a second mortgage or take less for your home, then you don't want to find that perfect home only to realize that you aren't ready to make an offer on it! Have your Realtor set up a link into MLS so that you can start seeing what is on the market and drive the neighborhoods to see what neighborhoods you like! This way when your home is ready to go on the market, you have a feel for the market place you will be purchasing in!
* Third, make sure you know the market your current home is in! Although Richmond as a whole is in a strong seller's market (meaning that we have very low inventory for the number of buyers out in the market place), there are still neighborhoods that are not quite as "hot" as others are! So have your Realtor set you up with a link into MLS so you can see what is happening with real estate in your area and you will know just what your competition is doing so your home will be ready when it is time to list!
* Fourth, make sure you know what you will plan to do once you get an offer on your home! If you have not yet found another home to buy, are you willing to go into a temporary rental or short term housing? How about putting your belongings into a POD and staying at a hotel for a short period of time? Perhaps going into a rental for 6 months or a year is the way to go! Whatever you decide to do, have a plan!
* Lastly, you may want to try to see if you can negotiate to allow the buyer of your home to allow you to stay in your home for a short period of time doing a rent-back! This means that you will be paying the buyers of your home a per diem rental to allow you to stay in your home after closing! But keep in mind - not every buyer is willing or able to allow this, and it is only for a very very short period of time (normally a few days to maybe a week or two at the most).
As you can see, there are some options for you! But it is important that you discuss this with your Realtor, your lender, and more importantly, your family! Each person's situation is different, so knowing what you can and cannot do, and what you are and are not comfortable doing, will decide how you want to proceed! Without having that discussion, it can sometimes feel like you are juggling balls in the air and hoping you don't drop any of them!
Have a question? Thinking of selling your home? Thinking of buying a home? Want to know what is happening in your area? Feel free to call or email me and I would be happy to help!