How to buy and sell a house at the same time; It’s hard to do move-up or contingency deals, but not impossible

Affordable home prices and low interest rates have lured investors and first-time homebuyers into the housing market, but move-up buyers are a tougher sell. Many homeowners are simply stuck in their current homes because of an underwater mortgage. Others are concerned about the timing of transactions so they can seamlessly move from one home to another — at a time when houses typically spend more days on market and thorough mortgage underwriting can make for unpredictable closing schedules.

In fact, some say that when move-up buyers return en masse, that will be a sign of a healthy market: “To me, one of the bigger indicators of the market stabilizing is the realization of people that they can buy a home and sell a home,” said Steve Berkowitz, chief executive of Realtor.com. All that said, sometimes people simply must move. Their family expands and they outgrow their space. They get married. They relocate for a job. Life goes on.

Thankfully, it’s not impossible to make a double-sided transaction work these days, especially in markets that are showing some signs of bouncing back, in terms of sales and prices. “We are seeing sellers realizing that even though they might not be able to get as much money for their property as they hoped … they’re able to get so much house for their money now, they’re able to balance that and it makes sense for them,” said Jessica Edwards, consumer specialist for Coldwell Banker Real Estate, and a real-estate agent based in Wilmington, N.C.

Of course, a move like this takes careful planning.

In struggling housing markets, some home sellers won’t allow a contingency on the contract that states you need to sell your home before you will complete the purchase. Plus, don’t count on getting a bridge loan, a temporary loan that allows a buyer access to the cash needed to make a down payment on a home while their equity is still tied up in their former place. Many banks aren’t making those loans these days. Those interested in swapping their existing home for another this year should consider some of the steps Susan and Adam Webb took to make it happen for them. Below are several.

Learn the market

Early on, you’ll want to involve your real-estate agent and understand what your home will realistically sell for. If you don’t have the equity to sell your existing home and come up with a down payment on another home, your process may stop right then and there.

After making the decision to follow through, educate yourself on the market. The Webbs, for example, searched for a home for three months before their existing home went under contract. That helped them stay aware of what was on the market so that when it was time to get more aggressive and put in an offer to buy, it didn’t feel like it was a quick decision, Susan Webb said.

“Before [sellers] put the property on the market, they should go out there and see what their money can buy,” said Jacky Teplitzky, managing director of Prudential Douglas Elliman in New York. The process of buying a new home and selling your old one should be happening simultaneously.

See the competition, and outshine it

A big challenge of selling a home is making sure it’s always ready to show. Whenever a potential buyer visits, the house should look better than any other property in the price range. “If I’m a good businessman, I’m going to look at what the competition is like — everything that my potential buyer is going to be seeing,” Purcell said. Once you’ve done that, get your home ready to compete.

That doesn’t have to mean spending a lot of money, either. A little sweat equity and a willingness to maintain a show-ready home will do. Keep the counters and sinks clean, de-clutter, tidy up the closets, keep windows clean, have the beds always made, keep the place free of odors and keep the lawn trimmed, he said. A fresh coat of paint doesn’t cost much yet can make a huge difference in brightening up interiors. “Make it as beautiful as you can on your budget,” he said.

Price competitively

Sellers are more willing to price their homes more competitively these days, according to 600 Coldwell Banker real-estate professionals surveyed in a recent poll. Fifty-one percent said sellers are more willing to price their homes more competitively this year compared with last year. If you can do it, Purcell advises pricing a bit below the market to catch people’s attention. Pricing competitively from the start will entice buyers early on and increase the likelihood it won’t languish on the market, he said. There’s always a ready pool of buyers who have been watching the market and know a well-priced property when they see it.

Competitive pricing helped the Webbs get a contract in short order. “We went into it aggressively, rather than sit around and waste time,” Susan Webb said. Along with keeping it always ready to show, the list price “had a lot to do with it selling quickly.”

If you don’t find a new home in time, consider alternatives

Once you have a contract on your existing home and have found another you’d like to buy, good communication between all parties is essential to timing the transactions, allowing for a seamless move from one to another. But it’s not the end of the world if you don’t find a home in time.

“If you put the house on the market and it sells faster… you’re better off temporarily living somewhere for a couple of months,” as opposed to settling for a home you’re not in love with, Edwards said. You’re also not going to miss out on market opportunities by waiting, since forecasts indicate housing markets are likely to remain affordable a year from now.

If renting is a possibility, make sure you do some research on what you can afford in the rental market. Some homeowners haven’t been renters for a decade or more, and may be quite surprised about the going rent prices in this market, Teplitzky said.


Wintrust Mortgage is a division of Barrington Bank & Trust Company, N.A., a Wintrust Community Bank. Wintrust NMLS# 449042?. Program rates, terms, and conditions are subject to change at any time. All approvals are subject to underwriting guidelines. Program rates, terms, and conditions are subject to change at any time. This information is intended for mortgage and real estate professional use only and is not an advertisement to extend customer credit as defined by Section 226.2 Regulation Z. Copyright © 2012 Wintrust Mortgage 120401688


Thanks Gary Lau for the above information.

DID YOU KNOW?... According to the NAR, the top 3 approaches first-time home buyers use are: 1) online search for homes; 2) online search for info on the home buying process; and 3) contacting a mortgage lender.

HIGH-SCORING FIRST QUARTER... We're not talking basketball, just S&P 500 stocks, which ended the week posting their biggest first quarter gain in over a decade, up a very strong 12%. The Dow registered the best first quarter advance in its history, an 8.1% hike. Not to be outdone, the Nasdaq went up almost 19% the first quarter. Experts said that big institutional investors are feeling a little better about the economy and looking to make money in riskier stocks, pushing prices up.

The economic data continues mixed. Personal income and personal spending were up in February, both good things, but inflation was worrisome. Overall prices are up 2.3% the last 12 months, above the Fed's 2% target. University of Michigan Consumer Sentiment was up more than expected, but the Consumer Confidence Index was down. Fed Chairman Bernanke voiced his concerns that job market conditions remain far from normal.

For the week, the Dow ended UP 1.0%, at 13212; the S&P 500 closed UP 0.8%, to 1408; and the Nasdaq went UP 0.8%, to 3092.

Bond prices held steady, as there are still enough economic concerns to keep safe haven buyers participating in the market. The first quarter ended with the FNMA 3.5% bond we watch finishing the week UP .12, at $102.24. After edging up the last two weeks, national average mortgage rates switched direction in Freddie Mac's weekly survey. Mortgage rates remain firmly at historically low levels.

14,775 today ACTIVE listings... continues to drop, the market is moving along and this is great news to sellers and buyers, we are seeing multiple offers on homes yet once again and appraisals continue to be a issue on some new flip properties. Stay tuned for more information coming.

Don't Micromanage Your Credit Score

Your credit score is like a movie: constantly changing until you decide to freeze a frame

"Your score can be updated every time there's a new piece of information," says Sarah Davies, senior vice president of analytics at VantageScore Solutions.

Roughly 70% of credit scores change by up to 20 points in a 90-day window, according to VantageScore. Consider it a reflection of your credit behavior at a particular moment in time.

"You could do something every other day, like pay a bill or miss a payment, and it might change every other day," Ms. Davies says. "The reality is a lot of those updates are insignificant."

A score is determined mainly by how promptly you pay your bills and what kind of debt you carry, though other factors also feed into it. For example, a mortgage and a car loan hold more weight in the scoring system than a handful of retail credit-card accounts. So timely mortgage and car-loan payments are more important.

But mining your score on a monthly or daily basis won't improve it. "Consumers should be credit managers, not credit-score managers," Ms. Davies says.

What's important is that your "range of risk"—what lenders consider key to determine whether you'll make timely payments—is acceptable. But that risk assessment isn't consistent from lender to lender. Auto lenders, for instance, use a different algorithm than a mortgage lender or retailer might.

Scores also vary because the three credit-reporting companies don't have the same information. "Lenders don't report all the same things to all the [credit-reporting companies], which is why scores will vary," says Beverly Harzog, a credit-card analyst with Credit.com.

Don't worry about your scores changing unless the moves are dramatic. If your score changes significantly, either you made a financial misstep, such as missed a payment or, worse, someone stole your identity.

Don't worry about your scores changing unless the moves are dramatic. If your score changes significantly, either you made a financial misstep, such as missed a payment or, worse, someone stole your identity.

Here's what you should worry about and how to fix it.

Don't try to manage your score on a daily or weekly basis. If you wait for the full 30-day cycle, all your information will have updated and will be the best representation.

If you want to purchase a home or car in the next year, look at your credit score now and make moves to improve it by paying off debt in a timely manner.

Your credit reports may contain errors. If you contest something in your report, it freezes that information until a decision has been made.

A foreclosure or bankruptcy filing will lower your score significantly and affect you for about seven to 10 years.

A missed mortgage payment will set off alarms, especially if your payment history has been pristine until then, but a late credit-card payment can be more easily fixed by consecutive months of good payment behavior.

Mortgage rates remain near record lows Tight credit still crimping demand By Inman News Inman News® Share This Low mortgage rates and falling home prices have yet to kick-start homebuyer demand as the spring buying season approaches, as many would-be homebuyers who are willing to risk the prospect of further price declines are unable to qualify for loans. Freddie Mac's weekly Primary Mortgage Market Survey showed rates at or near record lows for the week ending March 8, with rates on 30-year fixed-rate loans averaging 3.88 percent with an average of 0.8 point. That's down from 3.9 percent last week and 4.88 percent a year ago, and just a hair above the all-time low in records dating to 1971 of 3.87 percent seen during the first three weeks of February. Rates on 15-year fixed-rate loans -- a popular choice for refinancing -- averaged 3.13 percent with an average 0.8 point, down from 3.17 percent last week and 4.15 percent a week ago. That's a new low in Freddie Mac records dating to 1991. For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.81 percent with an average 0.7 point, down from 2.83 percent last week and 3.73 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 2.8 percent the week of Feb. 23, 2012. Rates on 1-year Treasury-indexed ARM averaged 2.73 percent with an average 0.6 point, up slightly from a low in records dating to 1984 of 2.72 percent seen last week, and down from 3.21 percent a year ago. Freddie Mac Chief Economist Frank Nothaft noted that a CoreLogic national home price index fell for the sixth month in a row in January to the lowest level in nine years, and the typical family had more than double the income needed to purchase a median-priced home, according to the National Association of REALTORS®' Housing Affordability Index. But a weekly survey by the Mortgage Bankers Association showed applications for purchase mortgages were down 7.8 percent during the week ending March 2 compared to a year ago. Requests for refinancings accounted for 77 percent of all mortgage applications In a Jan. 4 white paper, the Federal Reserve described "extraordinary problems plaguing the housing market," including an excess supply of vacant homes, tight mortgage credit, and the costs of an "unwieldy and inefficient" foreclosure process. "The significant tightening in household access to mortgage credit likely reflects not only a correction of the unsound underwriting practices that emerged over the past decade, but also a more substantial shift in lenders' and (Fannie Mae and Freddie Mac's) willingness to bear risk," the Fed warned. Inman News columnist Jack Guttentag says that the Fed "shares the consensus view of informed observers that housing recovery has been hampered by excessively restrictive lending standards set by Fannie Mae and Freddie Mac." But Guttentag said mortgage lenders have been even more restrictive than Fannie and Freddie, and wonders why lenders don't compensate for low credit scores with higher down payment requirements, higher payment reserves, or lower maximum debt ratios. "There no longer seems to be any underwriter discretion in connection with conforming loans, but the reasons are not clear," Guttentag wrote in a recent column. "My surmise is that it is connected to the complex contracts that govern the relationships between the agencies and the lenders that sell to them." During the housing downturn, Fannie and Freddie -- which purchase mortgages and guarantee payments on mortgage backed securities, but don't make them -- have forced lenders to repurchase billions in loans made during the boom. When borrowers defaulted, in many cases Fannie and Freddie found alleged misrepresentations or fraud A key provision of the Obama administration's revamp of the Home Affordable Refinancing Program (HARP) is for Fannie Mae and Freddie Mac to release lenders who sign off on a refinanced loan from some legal liabilities associated with the original mortgage.