The ART of Buying and Selling at the Same Time
An interview with JoAnna Dougan by the Charlotte Observer
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How common is it these days for people to be buying AND selling homes at the same time?
It is most definitely common and a contributor to the limited supply of housing in the Charlotte Metro resale market. When there are more homes than buyers, sellers are more likely to accept a contingency on the sale of the buyers’ home. Many “move up, move over, or downsizing” sellers cannot make the move, without a house ready for them to move into. When the inventory is limited, you have fewer choices, competing buyers, and sellers that don’t need to accept a contingency on the buyers’ sale of their current residence, with so many buyers to select from. A seller will need to consider a “middle place” to move into to ease the transition, should it become necessary. This could be a friend/relative, an extended stay hotel, corporate/furnished apartment, etc. and store belongings until house two is able to close.
What would you say are the biggest challenges of balancing the two, and how do you overcome them?
Financing and housing inventory.
Financing plays a role in several ways: does the seller qualify to own the home they currently live in and the one they want to buy? If so, and they’re willing to carry two mortgages for a period of time, that’s the easiest scenario. If not, they need to get pre-approved as a buyer (vs. prequalified where your credit is run, but income, assets, and debt are not verified) at a minimum to compete with multiple buyers. When an offer is submitted by the buyers’ agent, they’ll need to disclose if they need to sell a home to be able to purchase the house and provide a letter from the lender detailing their ability to purchase. Buyers that do not have a house to sell would likely be favored vs. other terms of the offer. Here’s why: NC Offer to Purchase Agreements have a due diligence period that’s typically around 4 weeks for the buyer to conduct inspections, secure their financing, obtain an appraisal acceptable to the lender, and more. During this time, the buyer can cancel for any reason or no reason, as specifically stated in the agreement. Because of this, a buyer with a house to sell, doesn’t have a concrete sale until it closes. Lots of gray area and room for a deal to possibly fall through.
Housing inventory plays a role, in that the sellers who wish to move must have their home in move-in ready condition, updated/color neutralized/decluttered, and priced in line with the current market. In my opinion, most of the homes currently not obtaining a contract within a 45 day window are deficient in one or more of these areas. Sellers (turned Buyers) moving from one home to another are often not willing or able to make these improvements before moving in without a middle place to live; requiring multiple moves.
There are many other ways to make this happen too. If agreeable, you could rent from the owner of your second home and close after your current home closes. For liability reasons, oftentimes this isn’t advisable to the owner of the property. Many choose the path of building a new home and strategically put their home on the market when the new house is 60 days from completing (some builders will allow this.) Others may purposely sell without the 2nd home secured, move into an apartment or other temporary living situation, and start their home search in three to six months. Many apartment communities offer short term leases to accommodate. Movable storage units like PODS and Zippy Shells ease the process, since you can move your items, store them for time needed, and only have to empty them once (unlike moving trucks).
What are some important things to discuss with a real estate agent at the start of this process?
The time it will take to secure a buyer for their home in its current condition (compared to needed improvements), how to price the home correctly from the beginning, learn the average days from list to close in their current neighborhood, how to leverage the due diligence period for the home they wish to purchase, and where they are with working with a lender for their next home. Realtors experienced in this area will earn their commission and more finessing the process.
Do you recommend putting an offer in on a new home before listing your current home, or vice versa?
You can, but if it’s the home of your dreams, you better be prepared to sweeten the pot, so your offer stands out amongst others and hope the sellers would entertain a contingency on the sale of your current home. This could be in one or more of the following: price (keep in mind that if you’re getting a loan, it needs to be able to appraise for that price), shorter due diligence period, quicker closing date, and solid financing (at a minimum, be pre-approved and better yet qualify for both homes).
If you list and secure a contract on your current home before finding the next, be sure your Realtor helps you to negotiate a due diligence fee and period that’s not too easy to walk away from along with other key contract terms, be prepared to have a middle place to live, and possibly store your belongings until you close on your next one.
What should sellers know about Charlotte's housing market this year?
Interest rates unexpectedly dropped this year. It is still a sellers’ market for homes priced under $300K. There’s never been a better time to put your house on the market; shorter market time will reduce the number of showings before a contract. Be sure to hire a professional Realtor that can manage the process to your advantage and not only secure an acceptable contract on your home, but also keep the deal together during the buyers’ due diligence process.
For buyers looking to close this year, what should you know about Charlotte's housing market?
Interest rates may start to rise. I believe that will get buyers who’ve been waiting, to get off the fence and will add more buyers to the market and push prices up; basic supply and demand. Adding to that is continued rising rents; it is currently less expensive to own a home. If a renter is not relocating in the next 2-3 years, it makes excellent financial sense to own a home/condo/townhouse and build equity in the process.
Rising interest rates will directly reduce a buyers’ purchasing power. The longer you wait, the more it will cost you in both the price of the home and your monthly mortgage payment.
Any good house-hunting strategies, specifically if time is limited?
If you have time to do some research, use a reputable and updated website to search for homes to get a feel for what’s available (you can search my site by clicking here.) Secure a Realtor that will represent you as your Buyers’ Agent, set up a property search that comes directly from the local Multiple Listing Service (MLS) based on your financial qualifications, identify your needs and wants, and help you to navigate the process; working to ensure the best outcome for your investment.
Can you share any smart negotiating tips as it pertains to both buying and selling?
Now is not the time for a buyers to make an offer that’s significantly lower than the market price. The sellers could be offended and not want to work with you. Keep your offer clean: offer a fair price from the beginning before someone else swoops in and offers more (happens all of the time) and minimize the number of asks for items that are not already included with the sale (washer/dryer, refrigerator, electronics, warranty, seller paid closing costs, etc). If you’re in a multiple offer situation, oftentimes a personal letter to the Sellers can be beneficial.
It’s not the time for Sellers to list their home significantly higher than market value. It will likely result in price reductions, time on the market, and a stigma that something must be wrong with the home or it would have sold. Make improvements to get the highest price in the shortest amount of time. Have a Realtor alongside you to ensure the best terms; sales price, due diligence fee/time period, earnest money, review buyers’ financing situation, and more.
The current market moves quickly; buyers and sellers that are poised with the latest market information, a move in ready home, pricing, financing, and advice will get to the closing table with confidence and ease.
On the selling side, do you have any good staging hacks?
I get asked this often. Not every seller can afford staging and needs to manage this process for the least amount of money. More than 90% of the buyers that come and physically see your home will have seen it online first. Photos are key. You must have professional photography and before photos, the home must be ready. Fresh and neutral paint, neutral flooring, decluttering, and cleaning go a LONG way. The blue carpet might be in great condition, but will likely not motivate someone to come see it. A Realtor can also help you decide if your furnishings are adding or detracting from the appeal of your home. You can always pack and store items that aren’t adding value elsewhere. If you’re not planning to sell for a few years, start making improvements now, so you can enjoy them!
Is it still best to list during prime home buying season (April to June)?
It’s true that there are more buyers and sellers during this time period. However, housing inventory remains historically low and this has drastically impacted the seasonality of the housing market and buyers are out there now, waiting to purchase your home that’s move in ready! People move year round for hundreds of reasons. Selling outside of this season will also decrease your competition.
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HOW TO PREPARE YOUR HOME TO SELL…FAST!
By JoAnna Dougan, REALTOR®
The old adage that you never get a second chance to make a first impression is an understatement in the real estate business! You’re serious about selling and you want to expedite the process. Here are some tips learned along the way that will not only get you ready, but will help keep you ready to show throughout the time your home is on the market! It’s preferable that you do this BEFORE the photos are taken of your property for display on the MLS.
#1) Un-clutter, #2) Donate, #3) Clean & #4) Refresh Paint!
That’s it, now wasn’t that easy? Well saying and doing are two different things.
Un-clutter, de-clutter…doesn’t matter how you say it. You’ve got to make some decisions about what you should keep, dispose of, store, and what you should DONATE - an added tax deduction couldn’t hurt!
While clutter is what makes your home HOME, it’s not special to a potential buyer. You want a potential buyer to have a “clean slate” in which to picture their life with their belongings. Go directly to your local Target or Wal-Mart and invest in some Rubbermaid storage bins and a catchall carrier for each bathroom in your home (these will be for all your “keep” items that clutter your space).
It’s time to get everyone on board your campaign to sell. Give each member of your household a bin (or more for the sentimentals) and have them get to work on their personal space. It’s time to clean off all surfaces; put away desk/tabletop /dresser photos, unnecessary knickknacks/keepsakes, bag up those stuffed animals (except the extra special 1 or 2 that can’t be parted with), your pet rock…etc.
Assign at least one bin to the person in charge of the kitchen. It’s time to clean off those counters and put away any small appliances that aren’t used daily; remove all the cute photos, magnets, past birthday invites, Dr. appointment reminders, etc.; put that spice rack in a cabinet; - it’s your goal to have space to finally chop those vegetables you’re supposed to be eating each day; while being able to see the color of your refrigerator.
Assign another bin to each den/living room/great room and immediately fill them up with all the stuff you hate to dust; photos, knickknacks, those worn out pillows that don’t match your sofa. You get the picture…
Clean out those closets! Would you want to buy a house that had closets that were bursting at the door frames? More importantly, potential buyers won’t get injured when they open the closet doors. If you haven’t worn it in 6 months; donate it. If it has an odor; dispose of it. At this point, you may want to make another run for some additional storage bins so all your “stuff” will be concealed and organized.
How do your hallways look? Are you tripping in the middle of the night? You’ll want to find all those items a home.
Stack all of these bins with their priceless possessions neatly in a storage space that’s not already full to the brim in your home/attic/garage, or perhaps a family member/friend might store them for you until you sell.
“…Now that your home is so beautiful, clean, and organized, you can’t remember why you wanted to move in the first place.”
Remember those bathroom carriers you bought earlier? It’s time to fill them with all the health/beauty products that make you YOU each day. Tuck them neatly under the sink when you have a scheduled showing (I know, now you have to de-clutter under there too so they’ll fit).
C-L-E-A-N, what a dirty word. It’s time for Mr. Clean to get busy! Start with the front door, since it’s the first area your potential buyers will see. Work your way through your home and don’t forget the windows, baseboards, doors, light fixtures, molding, kitchen/bathroom cabinet door fronts, windows, pantry floor, small/large kitchen appliances, polish your wood furniture, vacuum/mop all floors…you get the idea. I told you it was a dirty word. Remember, there’s no such thing as too clean.
Tidy up the yard and remove anything that isn’t lustrous and green. If the season is right, plant some new annual flowers (don’t forget to water them). Keep the grass mowed and well kept! Pressure wash the exterior siding/patio/sidewalk.
You’ll want to repeat this process at least weekly, or right before a showing if you have enough notice/time. Aren’t you glad you de-cluttered? It makes cleaning a breeze. In fact, when you sell this house and move, you will have likely forgotten what was in all of those “special” bins and might just make another run to make a large donation.
Now that your home is organized and tidy; it’s time to think about touching up the paint on all walls/molding/baseboards in your entire home. Also, If you’ve got a really “bold” colored room that may not appeal to everyone, you may want to consider a $30 investment in a gallon of paint that might neutralize the color palette. Some Sellers wait and go this route only when they get feedback that potential buyers don’t like the paint color. It’s up to you!
A FEW EXTRAS:
Fix that leaky faucet, replace toss pillows on sofas/beds, add a fresh floral arrangement, buy some Glade plug-ins. KEEP IT FRESH LOOKING & SMELLING! You may decide to move some furniture around to make the rooms more spacious.
Lastly, ask your most OCD friend for an honest opinion of any additional areas in need of improvement. Your preparation will go a long way to selling your home faster and removing potential buyers’ objections.
You’re all done! I know what you’re thinking, it happens to everyone. Now that your home is so beautiful, clean, and organized, you can’t remember why you wanted to move in the first place.
It's important for buyer(s) to have this letter before starting their home search. To get one, you submit a basic application (online, in person, or over the phone) for a mortgage with a lender (unless you are paying cash, in which case you'll need to provide "proof of funds".) It's been covered in my Realtor training extensively and the reasons vary depending on whose lens you are looking through, so I’ll share it from all viewpoints:
Buyer: The buyer’s time is valuable and they are looking to the Realtor to give them professional advice. The buyer doesn’t want to waste time looking at homes, if they don’t know how much they qualify for, IF they qualify, and an honest estimate of the expenses involved. Also, in a competitive market, a buyer may find the house of their dreams, but find themselves unable to submit an offer without the lender letter. Meanwhile, someone else will submit an accepted offer before the buyer has time to hear back from their lender OR worse, unable to get a loan for it and no other house will measure up causing disappointment. A Realtor would do a disservice to the buyer, to not ensure they have their best foot forward and obtain an estimated payment for a mortgage (as interest rates fluctuate.) Be in the know!
Buyer Agent: Safety, time, and ethics. Realtor safety is paramount. Many Realtors do not know the person(s) they are working with and a lender letter gives some peace of mind. Many Realtors have lost their lives in recent years for failing to go this extra step. Also, Realtors are not paid by their firm for their time showing property; income comes from closing homes. It’s not a good business practice for Realtors to spend countless hours showing property to buyers that might be unable to buy. This costs time and money; an experienced Realtor will balance this investment of time with a qualified buyer. Ethically, a Realtor shouldn’t be showing houses without the lender letter. Many sellers require that the buyer have this step taken care of before a Realtor schedules an appointment to show their home.
Seller: The seller is asked to leave their home for all showings, giving the buyer time to view the property. This window of time could be 30 minutes – 2 hours, depending on the appointment. Sellers must prepare for the showing (clean, make beds, etc.), make arrangements for pets, children, work, meals, etc. to accommodate. Also, the seller may have valuables such as electronics, art, medications, etc. and they want qualified buyers touring their homes to curtail risk.
I’m sure this helps you to see why this is required - preparation is everything in securing the home of your dreams!
As an extra step, you’ll also want to get pre-approved when you have more time. This basically means all of your assets/debts are verified by the lender and it makes you a stronger buyer, especially when competing against other offers.