Buying and Selling at the same time is not for the faint of heart. There are twists and turns in most real estate transactions and if your move is dependent on everything going smoothly, which it rarely does, you may wonder if it is worth considering at all…
“Patience, persistence and perspiration make an unbeatable combination for success.”
Napoleon Hill
Click on the picture for the Podcast OR Below in the text link
If you have funds available to Buy the home you want, move, then spruce up your old home and sell. You will get more money from the home you are selling and will more than likely get a better deal on the house you are buying.
If you do not have the funds to do this yourself, there are programs out there that allow you to take the equity from the house you currently have to put toward a new home and then move and then get the old home ready for sale and then pay off the funds borrowed that you put toward the down payment that you borrowed from the equity of the old home. Again, you should be able to sell for more than if you are selling and living in the home and you definitely won’t have the stress of hoping all goes well with the purchase of your new home and sale on the same day.
When you need to buy a home with a contingency, some Sellers will not accept your offer just because of that one contingency, others may only accept if you are under contract to sell your current home. But, if you wait until you are under contract to put an offer on a house you will have lost leverage as a Buyer, and while it may not seem fair, many Sellers will use this leverage to their advantage and want more than they would if you did not have a contingency.
So maybe you have looked at all the above options and you have decided to go for it and do it any way…some people are thrill seekers! So get under contract before you even list if you can. Some Sellers have vacant property and they are more than willing to accept your contingent offer and give it a whirl.
You will want to time accepting offers with the rules of your state, in AZ the Seller of the home that the buyer is purchasing has the right to veto the contract that the Buyer enters into to sell their home…kinda crazy! You could find yourself having sold your home and the home you are under contract to buy the Seller doesn’t like the contract you entered into and cancel the contract. (I always put a clause in the purchase contact that the Seller has a right to decline and then that other purchase contract is now void) I think this is very very confusing so please feel free to call/text/or email me if you want!!
Your agent will want to be communicating with both agents often (more often than usual) probably every few days, and double checking with title and lenders on both deals to make sure all is well with both sides. Making sure signings are happening timely and funding with lenders is all figured out. You want an Agent who feels confident in this similtanenous close and doesn’t have a vacation planned in the middle of it, same goes for Title if there are vacations planned be sure that you know who and when the back up will be in place. I cannot stress enough that your agent will need to be hyper vigilant.
We think that only Buyers need to get an Inspection on a home, but in reality when the Seller gets an inspection it can save them money on costly last minute repairs and even can increase the value before you list! Don’t forget to disclose what you found and how you fixed it!! Remember either you will find it or the Buyer will…
“Measure twice, cut once”
– adapted from John Florio 1591 book Second Frutes
Check out my Podcast by Clicking on the Image Above! Seller’s Get Your Inspections!
When a Seller has an inspection BEFORE they list, they have the opportunity to have things fixed on their own time table and thus costing less money for having urgent work done on the home to accommodate a Buyer Closing schedule. Here are just a few items that will come up when a Buyer has their inspection. Get ahead of the situation!
Most Common Inspection Items
Electrical – GFCI missing or not working, electrical outlets not working or not installed properly, exposed wires, circuit breaker mismatch, panel not labeled
Plumbing – Anti siphon missing from hose bib, leaky faucets, angle stops corroded or unable to move,
Sewer or Septic – Obstruction from the street to the home, belly in the line, deterioration of the line or tank
Termites – You really want to know this before you list!
Dishwasher – No high loop, not working properly, too noisy
Pool and/or Spa Equipment – Not working properly, less than 2-3 years useful life, not current to code
Water Heater – Leaking, no pan, less than 2-3 years useful life
HVAC – Not properly maintained, less than 2-3 years useful life, previous patch work done to keep it going, old R22 Freon
Windows – Broken seal, cracked windows, doesn’t open/close/lock
Roof – Debris, cracked tiles, roof less than 2-3 years useful life
Vegetation – Too close to the house or touching the roof (some loan products will call this out during the appraisal)
Handyman – Toilet seat not bolted properly, cracks in plaster or wood, door handles, locks, missing keys, tile cracks, doors not able to open close properly, missing or old smoke detectors and carbon monoxide detectors when there is gas in the home, anti tip device on the stove/oven missing, lack of proper attic insulation
So these are just a few of the things that a prospective Buyer’s Agent is going to be looking for. Why wait until you have already decided on a price for the home and then the Buyer wants you to come down on price or hurry up and fix everything in the next 2 weeks!
When it comes to whether or not to pay a Buyers agent as a Seller there are many things to consider and it’s not as easy as yes I want to or no I do not…let’s discuss
“Price is what you pay. Value is what you get.”
– Warren Buffett
Check out my Podcast by Clicking on the Image Above! Buyer’s Agent Commissions – To Sellers
When it comes to whether you as a Seller should consider paying the Buyer’s Agents Commissions here are a few things to consider:
Do you have other offers that provide a better net that should be considered? Or is this the only Offer you have received and if so, how long have you been on the market?
Always think about the net, not only to yourself but to the other side as well. This is a strategic move not a move based on empathy. (For those who think this is coming from a position of weakness)
If a Buyer needs to pay their own Agent that more than likely will increase their closing costs since currently it is not able to be wrapped into the loan. So again, strategically it makes sense for a Seller to included the Buyer’s Agent costs in a way that those costs can be included in the loan by agreeing to pay the Buyer’s Agent.
If the deal is cash then the issue of commissions is not as strategic as it is more a matter of principal to one party or the other. As a Seller, I would say don’t stand on principal if that is the only thing getting in the way of the deal. Just get to the net!!
Deciding on who pays what should not be a matter of conflict but a matter of strategic negotiating between the two parties. If the Buyer wants their agent paid then the best outcome for the Seller is to work with the Buyer to make the requests of the Buyer happen, and deal with the net with the Sales Price. This strategy really goes for everything, HOA Fees, Home warranty, and Concessions needed to close, if it was important enough for the Buyer to ask, give on everything except the Sales Price. Be strategic!
There are a lot of rules with 1031 Exchanges but there is ONE Huge rule that many people don’t talk about and it could disqualify your entire 1031 Exchange…
“The Best Way to Predict the Future is to Create it.”
Thinking that Holidays and/or weekends don’t count–THEY DO COUNT SO GET YOUR CALENDAR OUT! The IRS does not care that you don’t know how to count 45 days or 180 days or that you were sick or it was a weekend…or even Christmas!
Not making sure that you can close on the right amount of properties in time.–AGAIN THE IRS doesn’t care that you found something in your due diligence that disqualifies all of your choices that you made in the first 45 days!! HINT: Get under contract while you are under contract to sell your 1031 Exchange Property, do your Due Diligence and submit your properties by the 45th day with confidence that you can close on time!
Deciding to File your Tax Return for the year you did your 1031 Exchange BEFORE YOU COMPLETE YOUR EXCHANGE!! — NEVER DO THIS! Why this is rarely talked about is beyond me! But, I think that unless you deal with 1031 Exchanges as a CPA and a Realtor (which I am both) you forget this little but VERY IMPORTANT RULE. If your 180 days starts around mid-October (again get your calendar out!) then your 180 days ends around April 15th of the following year. If you file your tax return before April 15th and you have not finalized your 1031 Exchange Closing you just BUSTED your 1031…trust me that is not a good thing!!! So be sure to extend and then be sure to file by the extended due date after you finalize your 1031 Exchange!!!!
Thinking you can decide you want to do a 1031 Exchange on the day or after closing of your property you are selling! OMG get your qualified intermediary figured out BEFORE you even put the property you are selling on the market! Know who your team is, Realtor, Title, and QI. Have conversations with all of them, know their qualifications ask questions and then keep at it until you have a game plan. Having bad representation is not an excuse for missing deadlines or doing the 1031 Exchange incorrectly. The IRS is very unforgiving on this, if you want to play in the big leagues of 1031 Exchanges you need to know as much as your representatives and be on top of it!
Not reading and knowing the HOA rules that require the property to be owner occupied for a certain amount of time before it can be rented. WOW, I have seen this one Bust a 1031 and/or cost the investor a lot in penalties because they had to keep the tenant and pay the monthly HOA fines. [Real Life Situation–Agent/Buyer did not read the HOA documents that said the Buyer needed to occupy the property for 2 years before it could be rented. The Seller didn’t disclose this information either. The Seller had a tenant with a lease in place. On the close of escrow the HOA sent a letter to the new buyer (part of the 1031 Exchange) we know you have a tenant, you must pay us $400 a month for violating our policy of not being owner occupied AND as you know you cannot terminate the lease as per the Arizona Revised Statues…have a nice day (ok maybe they didn’t say that last part–but it was a big mess, PS I was not involved in any part of that transaction!)
There are so many things that can be done with a 1031 Exchange like combining it with a Section 121 (and no I am not going to go into details-you need to talk to your CPA!!) Doing a 1031 Exchange is not for the faint of heart for any of the participants, lots of rules, unforgiving of mistakes, and a lot of money on the line if your 1031 gets busted!
Here is a YouTube Video about the 1031 Exchange Concerns
Some Questions to Ask Yourself When You are Thinking of Buying or Selling Your Next Home!
Do I love my neighborhood?
Am I ok with the time that it takes to get to the things I do daily or often?
What am I most dissatisfied with my current home that brings up the question in the first place?
Are any of the issues that concern me temporary?
What would my ideal home have, be located, include or not include?
Can you envision yourself in the new home and does it excite you?
If You Are Ready for the Next Step…Here are Some Questions to Ask Yourself to Have Ready for your Agent!
Where do you ideally want to be located?
How far in minutes from the things you do daily or often?
Single Family, Condo, Patio Home/Town Home?
HOA or No HOA?
How many parking spots do you need on a daily basis and for guests?
How many pets do you have or want to have and their size?
Is your family size changing in the near future?
Do you need a gas stove or is an induction stove your ideal?
Do you want a pool? Private, Community, or NO Thank you!
Guarded, Gated, or None of the Above?
Approximately what do you want to spend per month? (not just what you qualify for)
Talk to your agent and let them know while you may qualify for a certain amount that doesn’t mean you want to necessarily spend that amount.
Also, it is important to separate your “wishes” from your “deal breakers” and let your agent know which is which. Sometimes, one persons wish is another persons deal breaker, so if it not a deal breaker, bring it up and then immediately say it is NOT a deal breaker.
When you get the list of homes, also ask for the criteria used to create the list so you can double check that there isn’t more or less than what you want! And Do NOT Hesitate to tell your agent you want to change the criteria if you aren’t finding what you want. Expanding a couple of blocks one way or the other, or being ok with a den instead of a bedroom can open up a whole set of options!
Here are some ideas on the Buying and Selling Decision!
If you are thinking that your only options on a low appraisal is to agree or get out, then you would be sadly mistaken! There are a lot of different options that I would consider (and so have my clients) as a win/win on a low appraisal. Let’s consider some scenarios:
Scenario 1-The Appraisal Is Just Not Making Sense! So you look at the details and the bedroom count is wrong, the square footage is wrong, the contract price you agreed to is wrong, the Loan Type is wrong (FHA instead of VA or Conventional), the comps are in an area so far away in another city that you are wondering what the heck is going on with this appraiser!! First of all go through everything in detail and make detailed notes and gather your back up to prove your side. Sometimes, an appraiser is going so fast that they miss a Counter Offer or maybe there is a discrepancy in the listing and the county records on the square footage or they just get your file confused with another. Stay calm and request a reconsideration and document all of your findings without using the words “the appraiser was wrong”. Saying the appraiser was wrong will not get you anywhere and they will read everything you submit. So start by saying that you appreciate the time and effort they have put in for your appraisal, but that you noticed that the Contract Price was for $725,000, however, the Counter Offer #3 notes the Contract Price agreed upon as $750,000. Or that you noticed that the loan was for a FHA loan, however, the Buyer will be getting Conventional financing. You get the idea, the more nuanced you can be, the further it will get you.
Scenario 2-The Renegotiation! So you have looked through the appraisal and either you agree with the appraisal or the time needed to get a reconsideration done isn’t enough to close on time, or you tried the Reconsideration to no avail; Now is time to Renegotiate! Have the Seller Offer to buy down some of the interest and ask the Buyer to put the down payment partially to the under appraisal portion of the home. This option can be done in conjunction with coming down on price as well, but first find out how much buying down the maximum amount of interest will cost and provide in a return on investment. You must know this FIRST before negotiating a further buy down. If an agent tells you otherwise, ask them about their previous experience doing this, my guess is never or they wouldn’t try to get you down on price first.
Scenario 3-Commissionectimy! So sometimes a buyer is only putting the minimum amount down and there isn’t anything that can be done to lower the interest. In addition this works on smaller appraiser issues like $5,000 or so. What I do is tell the Buyer’s agent that I am willing to match them dollar for dollar in reducing the commission to get the deal done, then depending if there is a short fall ask the Seller for the difference. A Seller will be impressed that the two agents are already doing their part to make the deal happen.
So in summary there are a lot of options and they are NOT mutually exclusive. I have done all of these on just one home in some cases and got the deal done! Sometimes, only 1 or 2 of the options get it done, and sometimes both parties have to part ways…but before you do that give it your best shot to get past a low appraisal!!
So when you are considering an Agent to help you in your next real estate transaction, what do you think is important to you? Write those traits down and then put them in order of importance. When you write down your order of importance, go from top to bottom and ask this question, “If this was the only attribute that they had would that be ok?” Probably not, but let’s put them in a group. Then look at the list again from bottom to top and ask this next question, “If this was the only attribute that they did not have would that be ok?” This will obviously garner a different result. You will soon find what is truly important to you!
What do I think is the top attribute? For me, I think communication a) Timing–maybe you have a job and you can only talk after 7pm does your agent understand that? b) Method–So you are super busy and you prefer texting but your Agent wants to email all the time and you daily get hundreds of emails so you don’t see it. c) Content–Is the information you need done concisely or is there a story every time.
Let my experience help you know what you don’t know! There is so much that goes into buying and selling a home that the average person would not know all the issues involved in the contract, deadlines, rights, and remedies. Watch this video and I will give you the highlights of working with me…
There are so many things that need to be done before you list that will make sure that you are sold during the Shiny Penny Stage!!
Clear out all the items you don’t need
If you need to give away or toss items do that before you list!
Be sure to refold and organize your closets
If it is not in season, box it up and store it offsite or in the garage!
Make your home picture perfect–at ALL TIMES!!
Take your phone out and photograph your entire house and see what others are seeing (we tend to overlook things, that others won’t)
Look at your outside as well!! Act like you are a prospective Buyer and see what they might see!
Be careful about smells!!
Go outside breath the fresh air and then walk into your home, what do you smell?
It should smell pleasant and no pet smells
Neutral scents are Vanilla (year round) and in the Winter Cinnamon
We All Want to Get the Deal Done at the Right Price!!
Pricing your home can seem daunting, but it doesn’t have to be. The most important thing to know is what is your bottom line and then talk with your agent to figure out how to get there.
It seems simple enough-Put your home up on a website (take your pick there are many to choose from), a buyer will come, you will say yes to their contract, and the next thing you know you are signing closing documents! Well…NOT Quite!
1) Making it known that your home is for sale:
a. There are some ways to let other realtor’s know that your home is for sale that are more effective and require a licensed realtor to be involved.
b. There are international marketing venue’s that are also not readily available to the general public.
c. But let’s assume that you use the normal For Sale By Owner websites and people do see your home for sale…then what?
2) Qualifying Buyers:
a. When you are a For Sale By Owner, do you know how you are going to decide whether someone is not only financially qualified to look at your home but are trustworthy to be in your home!
b. A licensed Realtor® should always be in your home when potential buyers and are interested in looking at your home. Additionally, both agents are interested in making a deal work and not just looking at homes they are not interested in buying or they do not see the buyer’s agent has a bona fide buyer for. (Lockbox on an occupied home is NOT ideal—if this is important to you make sure you ask if your realtor will be in attendance during showings, if you decide to interview realtor’s)
c. How do you know what the buyer is thinking without seeming needy? Do you have a solid follow up plan? Do you know how to handle objections without getting personally attached to the outcome?
3) Making the deal:
a. On the surface it seems that the price is all that you need to worry about, but that is not true! I just heard of story of a For Sale By Owner that did not know until the day of closing that he agreed to 3% concessions and thus inadvertently paid what many would charge for commissions and still had all the headache of selling the home. On the day of closing when he said he didn’t know that he agreed to the concessions there was nothing he could do—He signed it! (it could have been a lot more—he would have never known until the day of closing)
b. Also, many Realtor’s will ask for more in commissions when working with a For Sale By Owner since they believe when it comes to the timing of various items in the contract it is going to be up to them to make sure that time lines are adhered to.
4) Getting to Closing:
a. If all the drama was over with in the last 3 steps perhaps that could be bearable. But, alas just as in engagements approximately 50% of all real estate contracts do not make it to closing! Some call it quits the same day or that week and then others a couple of weeks in, and then there are those that fall apart right at the time that closing seemed all but certain. Do you know your rights or lack thereof? Do you know how to smooth the deal over at the last minute so that you still close? Many a deal has been close to calling it quits at the 11th hour only to have the realtor’s working behind the scenes to make everyone happy and keep the deal together…all while their clients are asleep thinking everything is fine.
b. Do you know all the steps that are required of the seller to make the process go as smoothly as possible and to keep track of the buyers progress? There are things you can do and things you cannot do to track your buyer’s progress—not even all Realtor’s know—be sure to ask!
Let me know when is a good time to preview your home so I can provide the details to those who ask.
