20 Nov How to Handle Buying and Selling a Home at the Same Time
Disclosure Requirements – AKA “The Real Estate Full Monty”
If you are planning on buying and selling a home at the same time you will be fully exposed. I mean this in a good way, it does sound funny and a bit intrusive. Stay with me through my thoughts, I will fully explain.
Suppose you are going to move to another part of town into a new home that you have been planning on for some time. You just got a raise at work and now you want to upgrade your living space to accommodate your growing family.
It’s just time to sell! You are moving out of your starter home that served its purpose dutifully for years; it’s a bit run-down, needs paint, and maybe some new carpeting and a few other things.
Once you have decided to buy a new home you will want to obtain financing. This can be done in several ways. One way is through your local bank where you’ve had an account for years: they know you and cherish your business.
Financing can be done online, there are many different banks and the competition is fierce.
You can also go with the builder’s lender. They usually can give you some incentives the bank just can’t match.
Lastly you can visit a mortgage broker who has access to a large portfolio of banks and lending institutions that may have a better program for you. Many mortgage brokers can help with your overall financial picture, something internet banks won’t do.
Any of these will work, just check apples to apples and make sure you get the service and product you want. Also make sure they can perform and close on time, this is important if you are also selling a home.
Once you have chosen a lender you will have to give them ALL your financial information. I do mean all of it, all sources of income and all your debts. You will feel financially exposed!
It’s ok, be patient, the banks just want to make sure you are capable of and can pay for the amount you are borrowing. They don’t, after all, want to see the home in foreclosure 2 years down the road. They are actually protecting you, and themselves.
Once the bank has a clear picture of your financial situation they will be ready to proceed forward with the loan.
Now let’s talk about selling your home. In Arizona, where we practice real estate, there is a seven-page disclosure statement. This is filled out by every seller and is required by State law.
This document describes all that you know about the home. Remember that small roof leak, the door that won’t quite close or the water heater that constantly leaks. All these items are expected to be answered in honesty in this disclosure. I know, exposing yourself again! You are telling the whole world what is/was wrong with your house.
The new buyer for your home will get this disclosure and have a thorough home inspection. If the inspector is licensed, and he should be, expect him or her to find even the smallest things wrong with the house. After all, that is their job to make sure your new buyer is getting ALL the information about the home they are about to purchase.
The appraisal of your home could be the last point you can feel exposed. The appraiser will come to inspect your home. Another inspection! They will be taking notes on the features of your home that affect the value and be looking for safety, security and sanitary issues, like flaking paint, trip hazards, exposed electrical wiring, smoke detectors, broken glass and obstructions to doors and windows, even lifting carpet seams!
The appraisal report will be given to your buyer and their loan underwriter for review. Hopefully, the appraised value is at least the sales price and no conditions are found that could interfere with your property qualifying for the buyer’s home loan.
Did you know that your home has to qualify for a loan just like the homebuyer does?
I hope this is helpful to you. It can be uncomfortable if you are not prepared – kind of like your first physical exam when you were a kid.
If you still have questions and are buying and selling a home at the same time, reach out to your trusted Realtor®. They will know the issues that are specific to your local area.
Buying and selling a home at the same time can be really exciting but you might be surprised how much information will be shared about your finances and your home.
John Harings is a local Tucson broker at United Real Estate Southern Arizona. He specializes in residential and investment properties. Discuss with him directly: call him at 520-488-8363.