Timing is everything when it comes to selling or buying a home, especially if your clients are doing the two simultaneously. If you are helping a client upgrade, downsize or merely relocate, here are a few tips to share with them before they make the big move.
Recommend that your clients talk to a mortgage consultant and get preapproved.
Before your client begins the home-buying process, it is important for them to get preapproved for a mortgage loan to help determine their price point and ensure a smooth closing. “The mortgage interest rate your client obtains can impact the loan amount for which they may qualify,” said Ron Wivagg, national sales support manager of Prosperity Home Mortgage. Prosperity has a program called Lock, Shop & Home, which allows homebuyers to lock in their interest rate while shopping for a home for up to 90 days.
Advise your client to check with their mortgage consultant to see if they qualify for a new loan on top of their existing home loan or if they need to sell their current property first. If their existing house doesn’t sell before they close on their new home, they may want to consider a bridge loan, which can be used in between their two transactions.
Assure your clients that you will help them plan and manage their transactions.
It is important for your clients to try to plan their schedule ahead of time. Ideally, if they are selling and buying a home at the same time, they will close on their current home first and use equity in that home as a down payment for their new home, explains Wivagg. Based on the local market, you should advise your clients and tell them at what point in their home-selling process they should begin looking for a new home.
It might make sense for your clients to include a contingency in their transactions. Walk them through these contingencies and suggest if, or when, they should include one in their transaction. It is important to note that due to low inventory in many areas, properties on the market typically receive multiple offers and an offer with a contingency is not as appealing and may not be accepted. However, having a fully underwritten loan commitment preapproval is going to give your client a leg up. Prosperity calls this a Buyer Advantage pre-approval, and it can help your client’s offers standout when a seller is presented with multiple offers, explains Wivagg.
There are several components to selling and buying a home, and doing the two at the same time can be complicated. Planning is key. Timing, finances and experience are just a few factors to consider. Share these tips with your clients, so you can help guide them through the process.