Page 62 - November 2021

An article from a Chicago Lodge 7 Magazine sponsor
Sale contingencies: Your key to buying and selling a house at the same time
Buying a home in a red-hot real estate market can feel like an uphill battle. Between low inventory, sky- high demand and stiff competition, house hunters are faced with historically high prices. That’s where a sale contingency could come in handy: It could
help you secure a bigger mortgage to outbid
the competition.
How sale contingencies protect home buy-
ersSale contingencies stipulate that, as the
buyer, you need to sell your current home first before you can close on your new home. The idea
is that you’ll put the proceeds from your home sale to-
ward your purchase. Don’t have 20 percent for a down payment? Your lender could still approve your financing with this type of con- tingency attached to your purchase contract.
Buying a house on a sale contingency is a long process. Here are the steps to follow.
Step 1: Get your finances in order
The first order of business is to make sure you’re in a financial position to buy a new house. To-do items include:
• Calculate how much you can afford to spend and create a budget.
• Reach out to a real estate agent to get a sense of how much you can list your current home for.
• Talk to a loan officer to see how the addition of your home equity might increase the size of the loan they’ll extend you.
Step 2: Seek out expert assistance
Sale contingencies can be logistical nightmares. You’ll want three knowledgeable professionals in your corner to help you han- dle the process:
Real estate agent: Your agent will draw up your offer, give ad- vice and serve as a go-between for you and the seller’s listing agent. They can also help you stage and list your current home.
In many cases, you can work with the same real estate agent for both the buy and sell sides of the process. However, be careful if you use one of the popular real estate listing sites to set up a show- ing. You could be legally attached to your assigned agent for that particular property as soon as you schedule your walk-through.
Loan officer: Loan officers get you the mortgage you need to purchase your new home. They will send you a preapproval letter that tells sellers you’ll be able to secure financing — as long as that sale contingency is met. Your loan officer will help you prepare the documents needed to process your mortgage and close on your new house.
Real estate attorney: Be sure to have a real estate attorney look over any legal documents, including your offer.
Step 3: Prepare to sell your home
If your home is on the market when you submit your offer, that’ll show sellers you mean business. Get a jump on any repairs you might need to close the sale; you don’t want to delay the closing process because of last-minute maintenance work.
Step 4: Stage your home
Follow these home staging tips to reel in prospective buyers:
• Declutter! Pack away knickknacks, books and other items that
might make your home seem messy.
• Put away personal items. You want house hunters to envision themselves living in your home.
• Prioritize high-traffic areas like your master bedroom, kitchen and living room; these will be the focal points of showings.
•
Brighten up your space. Keep curtains and blinds open to let in natural light.
• Deep clean. Dust, dirt and grime are a buzzkill for house hunters.
Step 5: Put your home on the market
LISA SANDERS
62 CHICAGO LODGE 7 ■ NOVEMBER 2021
Real Estate
A standard sale contingency contract may give you 30 days to sell your home and another 30 days to close on it. That’s not a lot of time to find a buyer, so you may need to list your home at a lower price than you’d like to get people in the door.
Step 6. Find a buyer for your current home
The further along you are in selling your current home, the more likely a seller is to seriously consider your offer. Your sale contin- gency won’t seem like such a gamble if you already have a buyer lined up for your house.
The countdown to close on your current home starts as soon as the seller accepts your offer, so consider ways to make it more ap- pealing:
• Lower your asking price.
• Change up your staging.
• Boost your curb appeal.
• Revise your listing info.
Step 7: Create a competitive offer
All things being equal, sellers will choose an offer with fewer strings attached, so you might have to make your offer more ap- pealing. The most obvious option is to outbid other buyers, but you could also put up more earnest money, agree to pay the sellers’ closing costs, waive other contingencies or negotiate the closing date.
Step 8. Stay on top of the closing process
It’s easy to overlook important steps because you’re juggling too many distractions. Stay on top of inspections, appraisals and walk- throughs. You should also anticipate your closing costs, including origination fees, title insurance and appraisal fees, and have those funds on hand or in escrow.
Scheduling your closing date can be tricky with a sale contingen- cy. Try to keep those two dates as close as possible to minimize the expense of booking a hotel or a short-term apartment rental.
Step 9: Keep a leaseback agreement in your back pocket
If the purchase of your new home is dragging on, a leaseback agreement can come into play. Essentially, the buyer of your cur- rent house agrees to let you live there as a rent-paying tenant until you’ve closed on your new home. Not all home buyers will be on board with this plan, so treat it as a last resort.
Step 10: Still no luck? Consider a bridge loan
Bridge loans can help you float two mortgages at once without overextending your finances or driving away lenders. Your lender will extend a loan based on the value of your current home, which you then use for the down payment. Once you sell your house, you’ll have the funds to repay the loan.
Lisa Sanders of @properties has been selling real estate for more than a decade. Contact Lisa at 773-398-0378 or lisasanders.sold@gmail.com.