I’ve been wanting to warn sellers and seller’s agents about this for the last 10 days or so. Courtney’s new post is a great lead in to this added consideration for sellers and listing agents.
CAN YOU BUY THAT HOUSE, WHEN YOUR HOUSE SELLS?
Having had the benefit of working in a market exactly like this one, back in NJ/PA in 1992 or so, I think this warning will be timely advice for many.
When an agent is called to sell a house, they touch on the subject of “Where are you going to go when this house sells?” But most often the antennae of the agent is focusing on whether you will also be buying a house with them, or if they can get a referral fee by referring you to an out of area agent (usually 25% of the commission.)
WARNING TO SELLERS: IT IS VERY HARD TO GET A MORTGAGE. In the last market like this, many sellers assumed that since they had a HUGE downpayment, they didn’t have to worry about qualifying for a mortgage on the house that they were planning to buy. NOT SO!
Having 50% down and little income could leave you homeless, as NWMLS does not permit “provisional” listings. There’s no turning back.
Here’s how it usually “plays out”:
1) Seller doesn’t want to look at homes until their house has a contract. With houses sometimes sitting on market for well over 100 days, looking at what you will buy when your house sells is often put off until you have an actual buyer for the home.
2) Once the contract is signed around, the seller goes out and makes an offer on a house they are buying with 30% to 50% down.
3) Often the seller and the agent for the seller of the home they are buying are so impressed with the big downpayment, everyone all the way around assumes that someone with that large of a downpayment can get a mortgage.
REMEMBER: The buyer of a home has a legal out phase lasting about 10 days, but the seller does not have a legal out phase if they can’t get a house to go TO.
Often you can’t just go to the buyer and say, “Sorry. I can’t buy a house so you can’t have mine.”
So to listing agents, I know you want that listing, and your are primarily interested in getting the seller to sign that listing contract. But be careful that you are not making your clients homeless. If they are people living on a fixed income, saying they are planning to buy, part loan, your ears should perk up. Make sure they check with a lender as to getting that loan…before you sell their house out from under them.
We are often in the business of “GETTING PEOPLE FROM HERE TO THERE” moreso than simply “selling houses”. Don’t leave your seller’s homeless, as you walk off to the bank to cash your commission check for “selling their house”.