Juggling Houses

How to Buy a New Home When You Already Have One

What do you do when you want to use that lovely equity you have built in your current house to move up into a new one? This is not impossible. Moving equity from one property to another is how most people make it to their eventual “Dream House.” Here are some things to keep in mind.

  • Start with staging your house. This is actually the best time to de-clutter for your future move and go ahead and pack anything you won’t need for the next 3-6 months. Store it all in a garage, basement, or off-site storage. Then your house is ready for staging and you are ready for a quick move. 
  • Meet with an experienced lender who can help you analyze multiple scenarios. Besides pre-qualifying you for a new loan and helping you see what the new payment and cost to close will be at different prices, they can also show you what you’ll need to qualify for a new home loan. Maybe you have such a low payment on your current house you can get approved to buy your new house before you sell the first one. That will help you in negotiations with Sellers even if you plan to sell right away. You may also decide to refinance the current house and use some of your equity as a downpayment on the new house. There are all sorts of options a good lender can help you think through.
  • Go ahead and hire an amazing Realtor. They will help you look at the big picture of how much your home should sell for, what updates or upgrades would help it sell for more, and timing for your local market. They can also help you develop a game plan for finding and loving s home that will truly be worth the move.
  • Practically, your main question is when to sell your current home and when to buy your next home first. Both buying and selling are a process where you go from contract to close and then take possession over a number of weeks. If you can pull the six steps apart and see them as unique, you can move them around to see what best fits your comfort level and ability to finance.
  • Realize that there is a risk or cost associated with each step in the process. Sellers may not be willing to wait for you to start marketing your home from scratch but they may be ok with your already having a contract on your home and it having already made it through the inspection contingency. As a Buyer you may be willing to pay a little more for a home where the Seller will give you time to sell yours. No one wants to sell their home without a home to move into or hold onto a vacant house. Understanding each other’s perspectives helps everyone work together. 
  • What’s key in either buying a home with a sale of home contingency or having a buyer purchase your home with a home to sell is communication and well-written contracts. If other people will be counting on you to sell your home before you buy theirs, then they will want to know how likely it is to actually close. Everyone’s expectations need to be spelled out in detail. 
  • Think through two moves. If your dream home is under construction you may want to go ahead and sell your house. That will require an intermediate move but may be what you need to make everything else come together. That’s how I made my last move and I still have fond memories of that tiny little one bedroom house by Shelby Park and the last minute Christmas decorations we bought when our new house wasn’t finished yet.

I have seen this work out in so many different ways. Once I got a call from someone I had never met who wanted to buy their neighbor’s house and we were able to negotiate one day to get their house sold. Another time I had one client buying and selling in the middle of a string of houses all held together by each other’s contracts. However the situation plays out there will be stories to tell. And today’s dream house might look different to you in three years so this may be something you get to practice again!

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