For many living in Snohomish County, buying a new home is contingent on selling their current home since the majority of their purchase funds are reside in their current residence.
In addition to having the purchase funds available, Snohomish County's housing inventory remains and record lows which invokes stress and anxiety when trying to buy and sell at the same time.
Why?
The thought of being “homeless” or "not having a place to go" is terrifying for most and people don’t want to find themselves in that situation.
So, how do you buy and sell a home at the same time? Here are 2 strategies that you can use to achieve the buy / sale.
- Write a Purchase & Sale Contingent on the Sale of Existing Property
- Write a Purchase & Sale Subject to the Success Closing of an Existing Property
Write a Purchase & Sale Contract Contingent on the Sale of Existing Property
This step has the most moving pieces, the most challenges for buyers, and most risk for sellers.
An existing homeowner writes a purchase & sale contract on a property they want to purchase and includes an addendum (that in short) that states: This purchase is contingent on buyer selling their property at 123 Main St. If seller accepts buyer's contingent offer then buyer has 5 days to list their property and "x" amount of days to get it sold.
If buyer fails to sell 123 Main St in the contract time period then the contract can terminate. Or, if another buyer writes and a purchase and sale on the same property, that new buyer can “bump” the existing buyer from the purchase.
Write a Purchase & Sale Subject to the Successful Closing of an Existing Property
Still many moving parts and parties involved yet its overall, less risky.
A homeowner lists their property for sale and actively seeks offers from qualified buyers. Once a buyer writes an offer and seller accepts that offer, the homeowner can really start the buying process. With pre-qualification letter or secured funds at the ready, that homeowner is ready to write a purchase and sale. Similar to the previous strategy, this purchase and sale will contain an addendum stating the purchase is contingent on the Successful Closing of their property at 123 Main St.
This strategy is one we recommend the most because it out our clients in a stronger position compared to people using strategy 1. However, with housing inventory being low it can stressful if the right home or property doesn't become available.
The following are not buying and selling at the same time yet are 2 strategies a homeowner can use.
Secure Additional Funds to Purchase Non-Contingent
Securing funds can happen a in variety of ways: qualify for a home loan, borrow against other investments, borrow money from family / friends, receive a private loan (commonly referred to as "hard-money"), obtain a HELOC (home equity line of credit) ... etc. By securing additional funds, a homeowner can freely move forward with a purchase, move-in at their leisure, and have time to sell their existing home with less stress. This is commonly referred to as a Non-Contingent Purchase.
The downside is the person(s) will own 2 properties at the same which can cause financial stress.
Sell Existing Home then Purchase a New Property
This plan is just like it sounds.
A homeowner lists their property for sale, accepts buyers purchase offer, the property closes, ownership changes, and the previous owner moves-out.
This requires the previous owner make living arrangement that may include living with family or friends, renting a property (AirB&B, VRBO) or is able to secure a month-to-month lease, stay in a hotel or in a RV/RV Park, or some other alternative living arrangement.
Now the previous homeowner becomes a buyer who has all their sale’s proceeds and can purchase free of any hindrance of selling a property. Though this option is the least attractive, it is an option.
If you would like more details regarding any of the scenarios above please leave a comment or send your questions via email and we’ll get back to you promptly.
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