Replacing Home Sweet Home

Most people in California move from their first home to a second, third, or additional homes over the course of their lifetime. Reasons for these moves vary and can be for more space, less space, better space, better neighborhood, or relocation.

Already owning a home, you will be involved in two separate transactions that will require a high degree of coordination. If not well planned, it can be very exasperating. Here are some of the things to consider, and ways to make a move smoother:

  1. If you can afford to purchase your new home before you sell your present home, you are in an enviable position. Unfortunately, few home owners are in that position.
  2. If you qualify, you may be able to obtain what is often referred to as a "Swing" or "Bridge" loan. These loans are based on the amount of equity in your present home, which is loaned to you to buy the new home. You then pay it back when you sell your current home. The cautions in this method are that if it takes a long time to sell your present home, it will be costly, and if the marketplace changes after you have purchased your new home, you could have less equity than you expected.
  3. If the buyer gives the seller an otherwise good offer, the seller may take an offer to purchase their property contingent upon the buyer selling their present property. The downside in this that the buyer usually has to offer more than they would if they did not have to sell their home.
  4. You can offer your current home for sale subject to finding a home of your choice in a period of days. You may not get as much as you otherwise would, since you need a flexible buyer who can wait out the uncertainty.

While the marketplace and your comfort level dictate the viability, here are some ways to keep anxiety at a minimum. Before you set out on this venture take the following steps:

  • Go to your mortgage broker and get pre-approved, so that you know how much of a loan you qualify for with or without the sale of your home.
  • Have your agent prepare a Comparable Market Analysis, a Sellers' Net Sheet, and a Buyers' Cost Estimate. With these three estimates, you will know your equity, your costs to preparing your home for sale, the costs to you as seller of you current home, and the costs to you as a buyer to purchase your new home.
  • Knowing how much house you can buy, have your agent give you a tour of the area and homes you qualify for.
  • Did you find a number of homes that could work? Did you find nothing satisfactory? The answer to this will give you a lot of information as to how you can best proceed.
  • If you are moving in the same area using the same agent to represent you selling your current property, and in buying the new property, it will save you a lot of agony as there will be one agent with the whole picture. If you are moving out of an area, ask with your agent to refer you to a good agent in the area you are going to. If the referral comes from your agent, the agent for your new property is more likely to work more effectively with your agent which makes a smoother, seamless transaction for you.