Moving Up or Down? How to Transition from your Current Home to your New Home

Tuesday, November 10, 2015

Whether you are upsizing or downsizing, if you plan to sell your current home and buy a newly built home, you’ll need to plan your transition carefully. The good news is that it can be easier to sell a home and move into another when you have plenty of time for planning. Moving from one resale to another often requires you to sell your home before you find your next place or complete both transactions simultaneously. Purchasing a newly built home means you’ll have a window of at least a few months or longer while your new home is under construction. During that time period you have the luxury of staying in your current home, preparing it for sale and then putting it on the market at the appropriate time. Depending on market conditions and your buyers’ circumstances, you can sometimes rent your home back from the buyers if you need to stay on a little longer before moving.

When to sell

While some buyers are able to buy another home without selling their current home, most people need the proceeds from the sale of their home to afford the next property. Unlike buying an existing home, when you typically must have your down payment funds in hand within 30 to 60 days of a signed contract, buying a newly built home gives you some breathing room. Typically, you’ll make a deposit on your newly built home when you sign a purchase agreement and then you won’t need the rest of your down payment funds until the closing. Depending on the size and style of your home, the weather and other factors, it could take four to nine months or even longer for your new home to be complete. This means you have that timeframe to focus on saving money for your down payment, preparing your current home for sale and allowing for ample time to market your home.

Choosing a Realtor

An essential component of a successful sale is working with an experienced Realtor who can guide your decisions based on a solid knowledge of local market conditions. It’s best if the Realtor you choose to sell your home also has some expertise in new construction transactions and can consult easily with your builder to track the progress on your new home. Timing the market perfectly isn’t always possible, but a good Realtor can work with you to determine the optimal time to put your home on the market to coordinate with the closing on your new home.

Your Realtor should also recommend improvements that will make your home more attractive to buyers. You’ve been looking at model homes so you know what the latest trends are in newly built homes; now it’s time to bring some of that style to your current home. While you can’t transition a traditional floorplan into an open floorplan, fresh paint, new window treatments and a sparkling clean home can bring in more buyers and offers.

In addition to the condition of your home, the other important element to the sale of your home is appropriate pricing. You may be tempted to reach for the stars when listing your home for sale, but a good Realtor can show you comparable sales and come up with a realistic price for your home. Studies have shown that pricing your home too high and then lowering the price once or twice can actually result in a far lower sales price because your home will have lingered on the market too long. Work with your Realtor to find a list price that will bring in buyers quickly yet provide you with a fair profit.

Low home equity solutions

Many homeowners experienced a severe loss of home value during the housing crisis and some homes have still not regained their full value. If you find that your home is worth less than your mortgage or a sale won’t generate the cash you anticipated for your down payment once you’ve paid your sellers’ closing costs, you still have some options available to make the transition into a new home.

If you have plenty of cash you may want to consider using some of it to cover the gap between the sales price and your mortgage at the closing table in order to get out of your old home and into a new one. This can be particularly advantageous when interest rates are extremely low and you want to lock in a long mortgage at a lower cost.

The other option is to keep your old home as an investment property and rent it out until you’re ready to sell. You’ll need to qualify for a loan for your new home as well as the payments on your old home, but the rental income can help your cash flow.

Consult a lender and a Realtor to review all your options when you’re ready to transition from one home into another.

Interested in a new home in St. Charles? Click here to download our free Homebuyer's Toolkit www.stcharlesmd.com/Toolkit.

Michele Lerner is a freelance writer with more than twenty years of experience writing articles and web content for newspapers and magazines on topics related to real estate, personal finance and business. Her work has appeared in The Washington Post,  NewHomeSource.com, Realtor.com, Bankrate.com, Insurance.com, HSH.com, The Washington Times, NAREIT's Real Estate Portfolio, and numerous Realtor association publications. Her latest book, "New Home 101: Your Guide to Buying and Building a New Home" and her first book, "HOMEBUYING: Tough Times, First Time, Any Time" are available now at Amazon.com or from MicheleLerner.com.

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