Dated: May 29 2020

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Don't Be Stuck With 2 Homes

The Buy and Sell Dilemma:

How to Avoid Getting Stuck with Two Homes

Every month, thousands of homeowners are faced with what we call the Real Estate Catch 22: the stressful dilemma of whether to buy first or sell first. If you buy before selling, you could run the risk of owning two homes. Just as bad, if you sell first, you could end up homeless.

Most homeowners have to walk this financial and emotional tightrope alone because most agents have no way to solve this predicament. Some companies offer a Guaranteed Sale Program which solves this dilemma. This program guarantees the sale of your present home before you take possession of your new one. If your home doesn’t sell in 120 days, for example, they will buy it from you themselves for the previously agreed price ensuring that you never get caught in the Real Estate Catch 22.  However, don’t be shocked if their offer is about 15% less than market value plus high fees, bringing you an offer ultimately 25-30% below market.

Before you hire any real estate professional, you should research the market to assess who can do the best job for you. You definitely want to hire someone who will be honest and candid with you about the likelihood of selling your home quickly. Your agent should have a good handle on the comps, activity in the neighborhood as well as a strong marketing plan.

When interviewing agents, find out if they can help you purchase a home contingent upon the sale of your own home first. An offer with a contingency will be studied by the listing parties and may or may not be accepted, considering factors such as fair pricing for your home, an active market, good photos and marketing, etc..

Another way to avoid putting a contingent offer on the home you want to buy is to get a bridge loan. A bridge loan may let you buy a new house before selling your old one. But bridge loans have high interest rates, require 20% equity and work best in fast-moving markets.

If you can be patient, it would be a good idea to test the waters by listing for 1-2 weeks to get a sense of whether to buy immediately or hold off. You should know by then what kind of traffic and feedback your home is getting, and any adjustments that are necessary to sell, including adjustments in your expectations.

You can combine this "test period" with an automatic extension built into your contract. Both buying and selling contracts will have a state-determined extension clause which gives you the right to delay closing. In NC, you can stick it out for up to 14 days before you close on the transaction. This could allow just the flexibility you need to transition from your current home directly to your new home without the headaches of temporary housing or rental.

How to minimize the risk and pain of the Real Estate Catch 22 requires a knowledgeable agent who can help you review all options. We at The Ally Group have seen it all, and can guide you through the dilemma as smoothly as possible.

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Albert & Lynn Alvarez

Unparalleled Customer Service! Meet The Ally Group team member, Lynn Alvarez. You need an educated, caring and knowledgeable real estate professional who stands by you through the whole process. Tha....

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