If you're buying a new home, you probably can't wait to get the keys and start making it your own. But if you're making a purchase while you're already a homeowner, you're likely focused on something else, too: Selling your current place. Jeannie Scott, a loan officer with SunTrust Mortgage, shares insights about selling a house while buying another and explains why having someone you can trust walk you through it can make the process smooth for everyone.
What are some key considerations for people who are buying and selling at the same time?
Scott: One of the most important things is to understand the equity you have in the home that you're selling. (Equity is the market value of the home minus what you still owe.) Most people will need the proceeds from the sale of their current home to fund their new purchase, so they’ll want to make sure they have an expert opinion of their home’s value from a trusted real estate agent and lender. This will help them 1) understand what their home’s value and equity might be and 2) figure out the budget for their new home, in terms of a down payment, closing costs and any other money that needs to be paid out.
Should buyers still get pre-approved when they are in the process of selling?
Scott: Yes, it’s still very important. Many people for logistical reasons would like to buy before they sell, and a pre-approval will help with that. You need to know whether you can afford a down payment without selling the home. Are you approved to pay both monthly mortgages if necessary?
Is there a timeline that works best when trying to buy and sell your home?
Scott: You might be in a better negotiating position if you have the resources for a down payment and are approved for mortgages on both homes. If you have a new home under contract but you still need to sell your current one, it could pressure you to sell for a bit less than your home is worth because you’re in a rush to not have two mortgages.
Another important thing to consider is whether it's a buyer's market (where there are more sellers than buyers) or a seller's market (where there are more buyers than sellers). If it's a seller's market, you're going to probably get a little bit more for your home, but then you need to realize that you're not going to be able to go in and lowball on the purchase side.
And of course, timing also has to do with personal circumstances. If, for example, you have young kids in school, you may prefer to make a move during the summer so school isn’t disrupted.
Any advice if you buy a new house before selling your old one?
Scott: The most important thing I want to emphasize is the fact that homeowners, especially ones in the position of buying while selling, need to seek out guidance they can rely on. It’s important to know what you’re realistically going to net on the first home. And when you're trying to juggle two transactions that need to fall into place just perfectly, you need a lender who knows what they're doing to help make it all work.