Selling and buying a home at the same time is difficult in any market. It is a matter of logistics and coordination and requires great flexibility and timeliness in the performance of all parties involved. It is possible if you take care of 3 basic concepts throughout the transaction.
1. Be hyperbolically flexible (Think Advanced Yoga)
Your dream can come true, it just will not come true exactly how you want it to happen. The path can be a bit bumpy when coordinating dual closings simply because of the number of moving parts. There are two other parties involved in the transaction in addition to their teams working to close their loans. In some cases, you can add another two parties those people are working with. Communication and flexibility is the only way these deals come together, especially in the current low inventory market.
So what does flexibility look like? Flexibility means when the closing date needs to change, all the vendors (movers, painters, cleaners, friends, utility company, etc.) need to be alerted and adjusted. It may mean, you end up living in an Airbnb for a week or so. It may mean more money at closing, or less money at closing depending on which side you are on. It may mean making unforeseen repairs at the last minute to keep the buyers in place, so you won’t lose the home you want to buy.
The unstated (well, I am stating it here) position you place yourself in is sometimes without leverage. Because most of our clients want to keep the home they fight to get under contract, they end up losing some bargaining power on the selling side of the transaction because most often they really do not want to walk away once we have found the place we want to live.
We will do everything possible to protect you contractually and give you more leverage, but there are certain points of no return that you pass along the way. At each stage, you get closer to closing but lose the ability to back out without losing your earnest money.
The best advice we can give is to hold your expectations, don’t get attached to how something will happen, and be ready to sign something, call someone or be somewhere whenever needed. We will give you as much notice as possible and we will be constantly overseeing and working with everyone to make it as smooth as possible the entire time. Don’t worry everything will be fine…In the end.
2. Openly communicate your willingness to all potential strategies (it’s “figure out-able”)
There are two types of people in the world. People who see a challenge and are optimistic but it can be figured out, and people who see a challenge and see all the potential pitfalls and of going down that path. Both of those types of people can be super helpful and both can come with their own challenges.
When working through a dual sale, an optimistic outlook is essential to getting through it. Someone even wrote a book with a title that perfectly explains the attitude needed during the process of buying and selling a house at the same time, entitled “Everything is figure-outable.”
There are a lot of agents and clients who don’t communicate well enough and are not on the same page when it comes to their attitudes and they end up limiting the potential solutions to challenges as they arise. I’ll give you a couple of examples. An agent may not propose a solution to a challenge because they are worried the clients will not like or are unwilling to choose a solution. A lot of times this revolves around money. This could come in the form of offering more money to a seller, putting more money down, offering credit to a buyer, and other solutions similar to those where a couple of thousand dollars now might make the difference between your house selling or losing the house you’re trying to buy.
Another example is a situation where the client holds back assets or fallback options the agent needs to know about because the client may be worried that if they expressed a willingness or the ability to do something, then it will necessarily happen that way. A great example of this is moving twice. It’s probably one of the most inconvenient things to do, but often necessary when seeking to accomplish a Buy/Sell transaction.
Nobody wants to move into mom‘s basement, stick all of their personal property in a storage unit and live out of suitcases for a month or two. However, if that’s the difference between maximizing the amount that you make on your home now, beating out 10 other buyers trying to steal your dream home, and securing the lowest interest rate in history that will save you thousands and thousands of dollars, a couple of months of inconvenience may be a small price to pay.
Agents need to trust their clients as much as clients need to trust their agents more than ever before. This allows options to be discussed openly and solutions found before you miss out on the amazing opportunities in the market.
The biggest regret of every agent comes when a client says, “we would have paid X amount of money more if we would have known it would have gotten us the house.” That means the agent and client didn’t go deep enough with their communication and trust.
3. Highest and best offers and don’t always mean the price a buyer is willing to pay…
In a market where a seller is receiving up to 50 offers on their home. The reason for accepting an offer often doesn’t come down to the money someone is willing to pay as much as the terms they are willing to offer.
Here are some terms that often make the difference between winning and losing the home you want.
· Nonrefundable earnest money
· Waiving an appraisal contingency
· Pre or post possession
· No inspection
· Faster closing
· Longer closing
· Buying personal property from the seller in addition to the home
· Pay your agents commission instead of asking the seller to do it (if written correctly, it nets out the same to offering more)
· Escalation clauses to offer to match or beat other buyers offers
· Other personal concessions
When a combination of these strategies is woven together craftily, your offer starts to look unique to a seller and their agent. The goal is to get your offer in the top 2 or 3 offers being considered. If you’re in that discussion, you have a chance and that is all a great agent needs. Once the listing agent is paying attention, they will communicate with your agent and that means you will likely have an opportunity to match or beat the other offers in consideration. It doesn’t mean you are obligated to do it, only that you have the opportunity to do it. Remember that important distinction. I’d always rather my clients have the option to go all-in than hold back and never get the chance.
At this point, you may be thinking that this is helpful to the buyer side of the transaction, and wondering how this will help when selling and picking an offer to accept…?
Remember number one? Do you want the best offer a buyer is willing to make? Think about the difficulties that may arise, and find the most flexible highest offer you can find. Ask the buyers if they’re willing to do certain things and get it in writing beforehand. For instance, ask the buyers if they’re willing to have a contingent closing date. This is where the closing date of the transaction is contingent upon you, the seller, finding the house you want, and closing when the sellers of the house you want are ready. Then allowing you to stay in your house after closing to avoid the double move discussed above. Don’t be hesitant to ask, or spend energy being upset about the market as a buyer. Just take advantage of being a seller on the sell side of a dual transaction, to make things a little easier on you on the buying side.
Now that you know some strategies that work, take another look at the list above. Choose one or two or five that are appealing to you, and counter any buyer offers with those terms. The worst that will happen is one buyer may back out, but the other 49 may agree to them. That’s what it means to be in a “sellers’ market.” You have a higher level of control of the terms of the transaction. You make the rules. So remember that, and take advantage of it fully.