Switching homes can be extremely exciting, but also quite stressful. As a homeowner, you think you already know a lot of the things you will need – gotta get your documents in order, you’ll have to contact an agent, and you’ll need to have a lender in mind to get a new mortgage. When my wife Olena and I decided to switch homes, we thought it would be pretty easy, having bought our current home a little over a year ago. However, when you’re buying a house and selling your current home at the same time, there are some unexpected hurdles that weren’t there as a first-time buyer. Read on so you can be prepared when switching homes!
Use the Same Agent and Lender
If you were satisfied with the agent you used when you bought your first home, give them a call if they’re still in business. I still had our agent in my contact list, and getting in touch with him was easy. He already knew our house and general situation, so that saved us a lot of explaining. Not only that, but he still worked with the same lender we had used for our first home. Basically, we wanted to sell our current house for X amount, and use the equity to put a down payment on a slightly more expensive house. “So far so good,” I thought, “Switching homes will be a piece of cake!
Clean Your House!
This was something I hadn’t really thought of. Your agent will want to show your house as often as possible, so you need to keep it squeaky clean! If you’re like us, this is easier said than done… Every time our agent called us and told us about a showing, we scrambled for most of the day, getting the house ready for the showing. To avoid this, try to keep the house clean all the time! Put that dish in the dish washer instead of the sink, wipe down the counter after each use, keep that bed made – it will save you a headache when your agent calls requesting a showing the next morning!
Try to be Organized!
Ok, so you’ve finally found an interested buyer. You start getting your documents together, scouring your hard drive for those old W2’s, tax returns and pay stubs. You’re doing great. For us, we really tried to be on top of the e-mails, quickly signing every Dotloop document that came our way. Before long ,we had a closing date, just over a month away!
Meanwhile, we had, of course, been looking on Zillow every day looking for our new home . Before long, we had found a nice place right in our price range – by the water! We were pumped. So far, this process hadn’t been daunting at all!
…until we realized that now all of our work was doubled. When you buy your first home, you can focus on that house when scheduling inspection, appraisals, etc. When switching homes, you have to juggle both. Believe me, trying to keep all these documents, e-mails and names of agents straight is not easy. It’s a good idea to keep a list of who is responsible for what. There were definitely times when I contacted my own agent with a question that should have been directed at the seller’s agent!
Time to Open Your Wallet…
It’s been a tough time, but you’re pulling through. You’ve got everything in order. Inspections and appraisals are scheduled on both homes, you’ve signed your life away on countless documents, and you feel ready. When switching homes, I figured that I wouldn’t actually need much liquid cash, since the the equity on our current home was more than enough for the down payment on the new house. In our case, we would have around $65,000 after closing, and we needed $54,000 for our down payment. Easy, right? We’ll have $11,00 for repairs and upgrades!
…not so fast. Here’s a list of other expenses we encountered
5% Commission to the agent – $7,500
Attorney fees – $500
Tax stamps – $1,000
Escrow catch up – $1,000
Appraisal on new house – $500
Inspection on new house – $500
…So yeah, now we only have $1,000 to work with, and that’s if our buyers don’t ask for credits for repairs. It’s definitely going to be a close one! If your position is similar, make sure you have some liquid cash – don’t expect to simply trade one house for the other.
Time to Build a Time Machine…
You’ve done the math, you’ve signed contracts on your new home and current home, and everything is in order. Time to start packing! We had about 30 days to pack everything up, which is definitely doable. Plus, our new house has been vacant for nearly a year, so there’s surely some sort of window of time for us to slowly bring things over there before we close, right? Maybe we even get a week after closing to finish moving?
Nope. Our closing is set for the 24th of August, on BOTH houses. That means we need to pack everything up into a truck, sleep on the floor the night before closing, and have everything moved out of our current house WHILE we sign the papers for closing. Legally, our house is theirs the moment we sign the closing papers, and we need to be 100% moved out. We tried asking the sellers of our new home if we could move things early, but that was a no-go.
So, add at least $500 to that list for a moving company, depending on how far you are moving. It will be a lot more for an interstate move. We have some big furniture, including a grand piano, so that’ll complicate things even more. We might even have to pay for a storage unit for a few days before the move, which will probably tack on another $500. If you’re keeping track, that leaves us with exactly $0 after the move. Luckily though, the sellers agreed to give us a $5,000 credit towards repairs, so we can at least get started once we move. Definitely don’t be afraid to ask for too much – it can’t hurt!
Summary – Switching Homes
That was a LOT of info, I know. Here’ s a quick list of what to keep in mind when switching homes:
-See if you can use the same agent and lender – it’ll make things easier!
-Keep your house tidy so you don’t have to clean every time there’s a showing
-Do the math, and be conservative – don’t forget all the hidden costs
-Be prepared to move out in one day, unless you’re renting a storage unit
With these things in mind, switching homes shouldn’t be such a nightmare. Good luck!
Any other tips or experiences from switching homes? Leave them in the comment section below.
Follow The Travel Bug Bite to find out how our home switching journey ends!