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“This I do know beyond any reasonable doubt. Regardless of what you are doing, if you pump long enough, hard enough and enthusiastically enough, sooner or later the effort will bring forth the reward.”  –   Zig Ziglar

Okay, so you’ve finally decided to put your home on the market – after the holidays – and start looking for that new home. There are dozens of new model homes to tour, and several areas you are considering. Once you start marketing your home, what can you do to protect yourself against that “domino” effect if you go on contract for a new home, while considering offers on your existing one? How can you minimize your risk, the way a builder does in a new home purchase?

It’s actually a great idea to “mirror” the builder’s program for purchasing a new home by conducting the sale of your new home along the same lines. Find out how much earnest money is required by the builder, and ask the same (or more) from a potential buyer. If further deposits are required by the builder along the way, ask for similar deposits from your buyer to feel confident that they are as committed as you are to the purchase. This may give you the feeling of lessened exposure in your transaction.

Your real estate agent can guide you through this process; ask him or her to “structure” counter-offers to buyers so as to minimize your risk. If you look at new home purchase agreements, there are time frames and safeguards in place for all kinds of elements of the agreement. Many new home contracts ask for written preliminary loan approval within the first 30 days of acceptance.

Depending on the escrow time for the offer on your home, it would be wise to do the same. This is one of the most critical aspects of either transaction, because everything hinges upon procurement of a qualified, loan approved buyer. (Ask your agent to explain the importance on “liquidated damages”, so that you know what recourse you have should your buyer fail to perform according to the terms of the contract).

Are you afraid your home will sell so quickly that you may not have time to find just the right new home? Add a clause to your acceptance that gives you a comfortable time frame in which to find a home, such as “offer accepted contingent upon seller’s purchase of another home within the first — days after acceptance of this contract.” I am sure at this point everyone will want to give you advice on where to find a new home! This is also a great protection for you if you are moving to an area unfamiliar to you, where it may take some time to scout all the new home areas.

There are three common scenarios when buying a new home while dealing with selling your existing one. One is to make a completely contingent purchase agreement. This is one in which you sign a contract with the builder to buy their home, but the purchase is wholly dependent upon the sale of your own. The “up” side of this is that you really are risking nothing monetarily. You are also put into the position of “first right of refusal” to any new buyer wishing to purchase the same home. This means that, if the builder is presented with a buyer whose position is stronger than yours (home in escrow, or no home to sell), they must give you a period of time – usually 48-72 hours – to decide if you can remove your contingency on that particular home site. If the down payment for your new home is primarily dependent upon the proceeds from the existing home, you may opt to “let go” of the new home and transfer your deposit to another home in the subdivision, or bow out altogether. The “down” side is that you may lose the home site or home of your dreams. Offers contingent on the sale of a home in a relatively healthy new home market have the potential to send you and your family on an emotional rollercoaster, so prepare yourselves for the ride.

Another consideration is to decide not to sign a purchase agreement on a new home until yours is in escrow. This may limit your time frame to move or find another home, but can give you the confidence you need to proceed with a new home purchase. Most builders consider “contingent upon the close of escrow” to be a fairly sure thing, especially when you and your real estate agent have furnished the builder with written loan approval for your buyer. If this is the route you choose, you may need to consider interim housing, should your new home not be ready for occupancy in time.

The third scenario is applicable only if you have the wherewithal to qualify for a new home purchase without the proceeds from your existing home. That is, you are willing to sign a non-contingent purchase agreement with the builder. You may have your home listed you home through the process of buying the new one, but are willing to do whatever it takes to make the new home purchase proceed without the proceeds from your old one. This may include an eventual change of terms or pricing on your listed home to make it sell, or even the idea of leasing it out until it sells. This can be a scary prospect to many buyers who envision double house payments at some point. Your listing agent is the person to rely upon to communicate recent neighborhood home sale activity, and should be willing to recommend your course of action. Hopefully, you would not have to get of the point of renting it out, unless the prospect of it does not deter you completely.

A real estate expert can guide you through this process as your advocate and advisor. Just remember that the agent is employed by you during the listing period. Communicate all of your concerns to your agent so that he or she can better represent your needs to potential buyers of your home. A good agent is, indeed a safeguard. Even if your agent does not represent you in the purchase of your new home, they will want to help you achieve your objective of a new home purchase if they indeed have your best interests at heart.



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Beginning is half done! – Robert H. Schuller

If you are buying a home with a federally insured loan and were able to borrow up to $125,000, you can thank a REALTOR®. The National Association of REALTORS® (N.A.R.) lobbyists, among the most powerful in the nation’s capital, successfully fought to have the borrowing ceiling raised from $87,000 in 1997.
If you were able to sell your home last year and keep up to $250,000 of the money tax-free, again, you can thank the NAR, which was instrumental in raising your tax-free net from a one time gain of $125,000 to giving you the ability to purchase and occupy your home for up to two years, sell the home and keep up to $250,000 tax-free, every two years.
Do you like deducting your mortgage interest rate off of your federal income taxes? Once, again, Realtors and their lobbyists are in your corner. Legislators constantly propose the elimination of the mortgage interest deduction, but the NAR and its lobbyists beat it back on your behalf.
So you didn’t know that Realtors put money in your pocket? They do. They are dedicated to protecting you – the home owner, buyer and seller.
Realtors and the NAR spends millions of dollars promoting home ownership annually in promotional campaigns and by taking political action. RPAC donates millions annually to federal candidates and political committees, making it one of the top twenty-five most influential lobbying groups on Capital Hill. Lobbying to protect homeowner rights is the number one legislative focus of the NAR and puts the NAR at the forefront of many economic issues.
In fact, the NAR is the only trade organization whose purpose is to watch over the rights of homeowners, buyers and sellers, and the only organization to actively lobby to protect those rights. Thousands of home owners today owe their ability to qualify for a home, the ability to buy a better home, and the ability to afford more than one home to the NAR and its lobbying efforts.
Yet, despite these tremendous accomplishments on your behalf, the NAR and its members, are often misunderstood and underappreciated. Only members of the National Association of Realtors have the right to call themselves Realtors. Realtors must be licensed and meet continuing professional requirements to stay in business. As members of the NAR, Realtors are held to an even higher code of ethics and standards of practice. The NAR membership is government-regulated, unlike the membership of many other organizations associated with the real estate transaction. Its members are subject to internal and state-regulated disciplines.
So when you choose to work with a real estate professional, remember to choose a REALTOR®.
By hiring a Realtor, you’ll put 730,000 Realtors in your corner.

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