If you are thinking about purchasing a bigger home, and have questions, then this is the video for you. I've got answers to the most common questions homeowners, just like you, ask about upsizing here in the twin cities.
How is it going? I'm Steven Hong with RE/MAX Results here in the Twin Cities of Minnesota. If you are outgrowing your current house and are thinking about buying a larger house, you probably have questions about the process. I'm here to answer your questions. This video will cover what you need to know about buying a larger house here in the twin cities.
Here are the most common questions that are asked by people just like you.
1. Do I buy first, or sell first?
2. How do I time the closing so that the purchase and sale are on the same day?
3. How do I get the most value from my current house?
4. How do I use the equity in my current house to purchase a new house?
These are the most common questions asked, but if you have a different question, reach out to me directly, or post in the comments below. And if you stay til the end, I have access to a special program that may make all these questions go away. It's a special program that makes it easy to buy and sell at the same time.
But first, the questions. Let's jump right into them.
#1 Do I buy first or sell first?
There are basically 4 ways you can answer this question. (chart)
The first is to BUY FIRST with the purchase contingent on the sale of your existing home.
The next is to BUY FIRST with the purchase NOT contingent on the sale of your existing home.
The third is to SELL FIRST with the sale contingent on you finding a home.
The fourth is to SELL FIRST with the sale NOT contingent on you finding a home.
In our current very strong seller's market, it is difficult to buy a home contingent on the sale of your existing home. This is because the seller of the home you want to purchase probably has several offers to choose from, many of which are not contingent on the sale of another home. This past spring, we routinely had 10-20 offers on just about every house on the market. And with so many offers to choose from, sellers routinely wrote off any offer that was contingent on a sale of another house. So the first option really is a non-starter, in today's market. Now that can change, and if we end up in a buyer's market, this option can be used.
The second option, buy first without being contingent on the sale of your existing home is a very good option. This option is just a regular purchase agreement on a house. The downside with this is that you have to be able to qualify for the purchase of a new home with your existing mortgage if you have one. If you don't have an existing mortgage, then this is an excellent option. But you need to be prepared to own two houses for a short overlap, probably about 2 or 3 months, depending on factors.
The third option, list your house for sale with it being contingent on finding a home, is usually not a great option. Although in this current seller's market, it can be done. If this were to swing to a buyer's market, this option is off the table. But in our current seller's market, the reason this is not a great option is that buyers understand how difficult it is to get a home, when there are 10-20 offers on every home. That means if they offer on your house, and it's contingent on you finding a home, they are not sure that you'll find one in the timeframe they need. If they are leasing, and their lease ends 8 weeks from now, how do they know you'll find something and be able to close on your purchase within those 8 weeks? They don't.
The fourth option to sell your house without it being contingent on finding a home, is just a regular sale. The downside to this option is that you need to be able to have temporary housing until you purchase your next home. For some people this could be moving in with parents, or friends for a couple months.
#2 How can I time the closing so that the purchase and sale are on the same day?
This is do-able the majority of the time. Usually it means that you have your house ready to go on the market the day after you remove your inspection contingency on the purchase of your new home. And your purchase has a slightly longer closing timeframe, say 8-12 weeks. Then when we remove the inspection contingency, we list your house for sale very shortly at a competitive price. We price it competitively so that we can get a purchase agreement quickly so that we can close within the 8-12 weeks that we had on your purchase. Then we can try to negotiate a date change on the one or both of the purchase agreements so that they coincide.
#3 How do I get the most equity from my current house?
The best way to unlock the most equity from your current house is to have it sell for the highest dollar. How do we do that? It all boils down to presentation and pricing.
Presentation: We need to present your house in the best light possible to attract the most people to your house. This has several components to it, namely preparation, staging, and quality photography. We want to prepare the house by fixing up the little things, broken outlet covers, patching nail holes in walls, touch-up painting, restaining a deck, changing a few light fixtures, making all the light bulbs match so they are the same color, and other minor update. Staging consists of re-arranging furniture in a buyer friendly manner, and decluttering, and maybe painting in neutral colors. Sometimes stagers also recommend changing carpeting or refinishing wood floors, if those are needed. And high-quality photos are what bring people in. It's important to show your house in the best light on the internet. Everyone is looking online and disqualifying houses they don't like based on photos. We don't want to be disqualified online.
#4 How do I use the equity in my current house to purchase a new house?
There is one main way to do this: take a loan for the downpayment needed for the new house. This could be in the form of a home equity line of credit, or a 401k loan, or a personal loan. The best is to probably use a home equity line of credit and then pay it off at the closing. But this has some costs involved, which lead me to another solution. This is the special program that I mentioned in the introduction of this video.
That's from a program called Knock Home Swap, link in the description below.
Knock is a lender and with this program, they will qualify you to purchase a new home without you selling your home, knowing that you will sell your home shortly. They may be able to loan the 20% down for your new house so that you can avoid PMI payments, as well as give you some "fix-up" dollars to do the minor repairs on your existing home.
All this allows you to purchase a new home, non-contingent, with potentially 20% down to avoid PMI, get some dollars for quick-fixes and staging, and then sell your home afterwards. It kind of answers all 4 of the questions that were already mentioned. There are some restrictions for the program, like you need to have a minimum of 30% equity in your existing home, you need to have a credit score of at least 620, the loan needs to be a conventional loan program, your existing house needs to qualify for the program, and a few other restrictions.
I want to be up front and say that I'm not paid by Knock and I don't have any affiliation with them other than I'm a knock approved agent.
If you have any questions about this program, reach out to me via my contact info in the description. I'm here to help.
The most common questions regarding buying a larger home in the Minneapolis, St. Paul area and the surrounding Twin Cities Metro Area. Many people have asked similar questions and in this video I address these questions.
Upsizing to a larger house, should you sell first, or buy first? How do we time the closings so the purchase and sale are on the same day? How do you get the most value from your current home? and How can you use the equity in your current home in the purchase of a new home?
If you are looking to move to the Twin Cities, contact me at
W E B: http://www.StevenHong.com
B L O G: http://www.StevenHong.com/Blog
F A C E B O O K: http://www.facebook.com/StevenHongRealtor
Brought to you by:
7700 France Ave S #230, Edina, MN 55435
Steven Hong - founder of Full Circle Home Team
Each office is independently owned and operated.
All photos and videos are my own.
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