Buying and selling a home can feel overwhelming for your clients, especially if they’re trying to line both up simultaneously. Since there are lots of moving parts to consider, knowing how to handle this situation as an agent will help you better serve your clients.
Ideally, buyers are in a better position when they have already sold their home. This way, as an agent, you know the budget your client is working with, and you do not need to include a “subject-to-sale” clause in their offer (as most sellers will want a premium price in this case), and you know the timeline for completion and possession.
However, you may find that several clients are hesitant to sell prior to finding the home they are wanting to purchase, for the fear of having to settle on a property they may not love, just so they have somewhere to go when they need to move out of their current home. There are ways to line up selling and buying, though. That means educating yourself to be an agent that understands the current market trends and knows what clauses to include in your clients’ offer.
It is important to understand the current market conditions when you’re helping a client buy and sell in the same market. Also, being connected with an experienced mortgage broker or financial advisor is a helpful resource you can pass on to your clients, to ensure everyone is on the same page with numbers and budget. If it is a “hot” seller’s market, it is less risky for a client to buy first, as they know their home will sell quickly. If it is more of a buyer’s market, it may be more risky to advise your client to purchase first, without inserting a “subject to sale” clause in an offer or without selling their home first, to ensure they will have the funds to close on completion day.
Some top tips for clients buying and selling simultaneously.
Here some tips you can provide your clients to line everything up properly:
- Make sure their finances are in line and they have a very clear understanding of what they can afford before you start the process. They can also speak with their mortgage broker about financing options, including bridge financing, in case the dates do not line up perfectly with their purchase and sale.
- Suggest your clients get started on preparing their home for photos and media, so you have everything ready to go as soon as they find the home they want to purchase, if they want to write a “subject-to-sale” offer as opposed to listing and selling first.
- If your client decides to sell first (which is recommended so they know what budget they’re working with), you can suggest inserting a longer completion date, to give your client time to find a suitable home after theirs sells.
If you find your client has found their dream home and would like to try to purchase first, you can attempt to add a “subject-to-sale” clause in their offer, and hope the home sells before time runs out on their deadline. This can get complicated if the home is not already listed on the market as it becomes a race against time, and you can always get “bumped” by the sellers with the time clause that is included in your “subject to sale” offer. That means you can go through all the steps to list their home and then get “bumped” by another buyer who writes an offer on the home your client is trying to purchase.
Another good piece of advice when your client is buying and selling simultaneously, is to focus on the gap in price – that is the most important piece. Meaning, if they are going to accept less on the home they are selling, they are also going to be paying less on the property they are purchasing (location and property type dependant). If they wait to sell in a “hot” seller’s market, they are likely going to be competing and potentially overpaying for the home they want to purchase.
Again, the best way to line everything up is to advise your client to sell first, before they go shopping, and negotiate a longer completion date, to give them time to find their next home. This will put them in a much better position as a ready-to-go buyer, and will also typically allow for more negotiating room on price, compared to other “subject-to-sale” offers they may be competing against.
Helping your clients line up their purchase and sale in the same market can feel overwhelming and complicated, but it doesn’t have to. As long as you educate your clients on the different options and scenarios with buying a home first vs. selling a home first, and understand which clauses to insert in their offer to protect your clients, you should be able to help reduce their stress around the process.
