Question Details

Renee, Both Buyer and Seller in Newman, CA

Selling and Buying

Asked by Renee, Newman, CA Sat Jul 7, 2007

I want to buy a new construction home and sell my current home. What is the best way to do this without having to pay two mortgages?

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The "best" way is to time the sale of the existing homea and the completion of the new build to coincide with each other. This is rarely the case in the best of times. Without knowing what market you are in it would be difficult to give it the ol' crystal ball guess.

However, when you are serious about moving into a new home (new build or otherwise) and it is contingent upon the sale of your existing home - first and foremost - contact an agent in your area and determine the market turnaround time for your neighborhood. Look at both best-case and worst-case scenarios - more than likely there will be some overlapping somewhere.

This is a critical time for you. I never advise clients to start looking unless they are serious. You could run into the home you just must have - and before you know it you're putting the horse before the cart. Don't put yourself through that type of disappointment or stress.

Know the facts - check out the turn-around-time; list if you feel comfortable - and then start planning your new home. Depending again on location and other factors such as weather - a new build could be 90-120 days out. Some more, some less - every case is unique.

One critical issue is the contract you sign with the builder. Most will not accept a contingent offer - whereby you sell your existing home before taking possesion of the new home upon completion. Existing homes (or resale homes) sometimes have a better flexibility depending on the needs of the seller...

I hope this helps. It seems more complicated than it is - but if you work closely with an agent you can't go wrong. We're trained to help you coordinate and time things appropriate to your situation -- but most importantly, keep you on track to your ultimate goal.

Plan - be realistic - do some homework - stay positive : but more than anything; decrease the stress and enjoy this wonderful experience for what it is! You are building a foundation for you and your family to grow and prosper!

Take care and let me know if I can help in anyway!
2 votes Thank Flag Link Sat Jul 7, 2007
Dear Renee
Jeanette offered some good advice, I'll add some suggestions:
1. Talk with a knowledgeable Realtor about the local market conditions. You need to find out a few key statistics:
A. How many homes, with the same characteristics as your present home, are on the market now? They will be your competition. How long have they been on the market?
B. Compute the absorption rate. Ask your Realtor. It's the total number of homes on the market, divided by the number of homes sold last month. The rule of thumb is that around six months is "average market", less than that probably means a seller's market, more than that probably a buyer's market.
C. Figure out how much you want to net after you sell your current home.
D. Talk with your Realtor to determine if your net goal is reasonable. Then talk with a lender about what financing options you have in order to buy your new home.

What the new construction builder will do is based on the market conditions. If he has a lot of new homes sitting around vacant, he may be offering special incentives to attract buyers. If your market is a seller's market he may not be cooperating with brokers and basically holds a gun to buyer's heads and says, "here, I dare you to make an offer".

If the market is "slow", the builder might accept an offer contingent on you selling your home. Most builder's require that you have your home listed with a Realtor in order to accept your contingent offer.

Renee, I hope that your market is "average". Get the facts, then act quickly. Summertime is the time most home sales take place (before school starts), so all things being equal, now is the time to move.

Good luck!
Keith

B.
1 vote Thank Flag Link Sat Jul 7, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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Many builders have guaranteed buyout programs. Ask the builder if they work with a specific realtor that can offer you that program. Sell your home first and then buy the new one is another option. Remember you'll also have about a month with no mortgage payment if you close on the new one at the end of the month.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Tue Jul 10, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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