If you are Buying A New Home but have one to sell, you have some options. This is a common situation and can confuse some owners. Although there is a preferred way to handle it, some real estate owners want to handle it their way.
The first step when selling and buying another home is contact your mortgage company. Explain what you are doing. Confirm with them that your mortgage can be ‘ported'. This means transferring it to the new property. Most mortgages are, but it makes a good question. Next have the lender pre-approve you for a new mortgage if you are buying for more money. Incomes, debt loads and credit ratings change over time. Bottom line is discussing your entire situation and find out what your options are.
The ideal scenario is to sell first, then buy. This situation makes some nervous, as they feel they might be out on the streets without a home. You can list your home, and then entertain offers when they are submitted. Suppose a buyer wants the home in 30 days. Or better still, they want a closing date that you feel is too soon, as you have not found another home. You can sign the offer back with a condition that you have ‘x' number of days to find another home. If you don't or the buyer will not wait, you have not lost anything.
Another situation is you might want to submit an offer on a new home before you list. This is really putting the cart before the horse. You cannot buy until you sell unless your financial situation allows it. If you go this route, you will submit a ‘SPP' offer. This stands for ‘Sale of Purchasers Property'. The condition will state that you have ‘x' number of days to sell your home. This will generally be in the 30, 45 or 60 day range. Included with this condition will be an ‘escape clause'. This allows the seller to continue to offer their home for sale. They don't want their property off the market while they are waiting for you to get a sale. If a second offer is submitted during the course of the condition, the seller can accept it. It does not have to be a better offer, just one they want to accept. If they agree to the offer, you will be served notice in writing that another offer has been accepted. As stated in the escape clause, you will have ‘x' number of days to remove all of your conditions and make it a firm offer.
The first scenario is the best route to go. By securing an offer on your present home, you will have some idea where you are going from there. You will know how much money you are getting and what the closing date is. Another thing to consider is that your negotiating power will be stronger with an offer that does not contain a SPP clause.
Remember, you are in complete control. Nothing happens until you sign an agreement. If you do and there is a condition to protect you, there is a backdoor out of the offer.
HomesByOwner of Durham Region recommends that everyone consult with a lawyer prior to signing any legal documents.
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