Make Sure You Qualify To Buy Your Next Home, Prior To Selling Your Current Home.

By
Real Estate Agent with West USA Realty

Make sure that you qualify to buy your next home prior to selling your current home.

You have decided to sell your home and purchase another one.  Okay, no problem.  You call up a Realtor and have them come to your home to take the listing.  So far so good.  You explain that the reason you are selling is that you want to buy another home after you sell your current home.  The Realtor goes through the paperwork with you, you sign the listing agreement and the Realtor puts your home on the market.  This could be the start of a serious problem.  Okay, now you are starting to wonder what the problem could be.  The problem is whether or not you have at this point spoken to a lender about whether you can qualify for your next home and how much of a home you qualify for.  Make sure you qualify for your next home in the Phoenix Metro Area prior to selling your home.

As a Realtor, we frequently hear a seller state that there won't be a problem with obtaining new financing.  They are absolutely sure of it.  The problem is that they have not spoken to a lender yet.  Maybe they have plugged in some information online, or just had a conversation on the phone with a lender, or worse yet they just "know" they can.  This is not good enough.  We are not trying to be difficult.  We are not trying to be control freaks when we firmly state that you MUST get your loan application in to the lender FIRST before listing your home so that you can be sure you can purchase your next home.

Imagine, for a moment, that you put your home on the market and you get a fantastic offer on the home.  You accept the offer.  Next thing you do is go out looking at homes and find a home that you want to buy.  You then put in an offer contingent upon your home closing escrow.  You feel protected.  There is one problem that you are not thinking of.  If you have not been pre-approved on your financing then you have to be concerned if you do actually qualify.  You have sold your home.  The contract on your home does not say that you are selling it only if You can qualify for your next home.  It states that you have sold your home IF the BUYER qualifies for your current home. 

Years ago, we had a seller referred to us by a friend of theirs which was a past client of ours.  This seller stated that he had a contract on a new build and needed us to list his home for him.  We asked him if he had been pre-approved for the new home.  He told us that he could qualify for it and that there was no problem.  We explained to him that he needed to be sure that there were no problem with his qualifying prior to us listing the home.  He was completely confident.  We listed the home.  After a couple weeks we received an offer.  We explained to the seller again that he should be sure he could qualify for the new build prior to signing this purchase contract on his current residence.  He was "positive" there was no problem.  He was wrong.

A couple weeks later we received a call from the seller.  He stated that after speaking to the new home builder's lender, the lender stated that he could not qualify for the bigger home he was trying to purchase.  He was a bit frustrated, but was willing to purchase a little bit smaller home than the one he originally wanted.  It was still larger than the home he was selling.  Okay, not the worst thing that could happen, well, not yet. 

We received another call from him about one week later.  He couldn't qualify for that home either.  Come to find out, they told him he would have to go down to the smaller home that they had in the series.  This home was the same size as the one he was selling.  He was really upset now.  Why move?  Well, he had signed a contract to sell his home with no contingencies written in for his protection as he was MORE THAN SURE he could qualify.  He said there was no need to write it in as he was told he wouldn't have any problem qualifying.  I think was irritated because we were pressing the issue so much.  He should have listed to us!  The worst thing did happen.  The builder's lender called him one more time and told him he couldn't qualify.  He couldn't buy at all.  Yet he sold his home!  He actually had to move into a rental with his kids.  He had taken the conversations with the lender as being solid, but once all the verifications came in it proved otherwise.  He was not frustrated with us as we tried on several occasions to get him to do something even if it was just a clause in his contract.  He was absolutely positive - But then he was wrong.  He called us a year later and was able to buy a home then, but for a year he was in a rental.  Not what he wanted.

Many times people who have purchased previously think that they are familiar with the process and that they KNOW what they are doing.  As Realtors we have seen so much more that they have.  It is important to listen to the advice that we give.  Every transaction is different to some degree.  A Seller may only sell a few homes in his lifetime.  We sell thousands and see thousands of different problems that any given seller may never see.  We must protect them even when they don't think they need to be protected.   We can't see all the problems coming, but we must learn from what we have experienced.   I have been able to use this example every time a seller says that "It won't be a problem".

I had a seller state the same thing to me today.  I told them I would list the home after they get their application in with a lender to be sure that they can do what they want.  I told them this story from my past client and they agreed to make sure they could buy before listing their home.  Wise decision!  It is much better to be sure!

 

If you are looking for a home in the Phoenix Metro Area, give us a call, we would love to help you!

 

 

Posted by

Brenda Cunningham

Brenda Cunningham, Realtor
Ron & Brenda Cunningham

WEST USA REALTY
1640 S Stapley  #124
Mesa, AZ  85204

Brenda  602.980.3133
Ron  602-499-0694  
Fax: 602.863.4623
www.CunninghamHomesAZ.com

*Recognized in the Phoenix Business Journal as One of The Top 50 Realtors in the Valley

 

 

 

 

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  1. Dan Edward Phillips 04/04/2011 03:38 PM
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Rainer
23,933
Orlando Masis
Austin Appraiser, for Real Estate
Appraisal IQ (Real Estate Appraisal) in Austin Texas

Ouch!  That really had to hurt, and I can only imagine how stressed out that seller was. Qualifying is not at all the same as it was a few years ago!

March 29, 2011 04:14 AM
Rainmaker
64,994
Brenda & Ron Cunningham
Realtors, Homes for Sale - Phoenix Metro
West USA Realty

Yea, he was really kicking himself for not listening!  Good thing we did what we could or I would have been stressed out in a different way!  We still have a great relationship today.  He gives us great referrals.  I guess he figured out that we know what we are talking about!

March 29, 2011 04:44 AM
Rainmaker
160,070
Colleen McConnell
Tallahassee Retired Realtor

What a shame. You were right to suggest that he make sure his financing would work before he sold his house.

March 29, 2011 05:02 AM
Rainmaker
1,384,730
Roger D. Mucci
Lets shake things up at your home today!
Shaken...with a Twist 216.633.2092

That's what happens when you try to put the cart before the horse..............big "ouch".

March 29, 2011 05:25 AM
Rainmaker
497,227
Dan Edward Phillips
Humboldt and Del Norte Counties, CA
Dan Edward Phillips, Humboldt and Del Norte Counties, CA

Hi Brenda and Ron, excellent input for home owners who will become home buyers.

March 29, 2011 06:26 AM
Rainmaker
1,338,967
Anita Clark
Realtor - Homes for Sale in Warner Robins GA
ColdwellBanker SSK Realtors ~ 478.960.8055

That's a tough lesson to learn.  Great info Dan that all sellers should ready...thanks for sharing it.

March 29, 2011 09:32 AM
Rainmaker
64,994
Brenda & Ron Cunningham
Realtors, Homes for Sale - Phoenix Metro
West USA Realty

Colleen -  I am glad we did.  Since then we have been VERY forceful about this subject.  It helps to have the story to back us up!

Roger - So true!!

Dan -  Agreed!  That is why I decided to put this in a blog.  Sellers need to be sure!

Anita - It was a very tough lesson to learn!  He won't make that mistake again!  We will be sure to always give this information as well!

March 29, 2011 12:02 PM
Ambassador
2,032,137
Todd Clark
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494
Keller Williams Realty

Great points! You certainly don't want to get your home under contract and then to start to look for your next home only to find out that you are going to have to rent for the next year before you can qualify again.

April 01, 2011 02:28 AM
Rainmaker
64,994
Brenda & Ron Cunningham
Realtors, Homes for Sale - Phoenix Metro
West USA Realty

Todd-  Absolutely not!

May 21, 2011 05:01 AM
Rainmaker
876,141
Ronald DiLalla
No. Orange Cty Real Estate
Century 21 Discovery DRE 01813824

Hi Brenda...BIG BIG mistake....I just went through a situation just like this.

June 10, 2011 03:20 AM
Rainmaker
64,994
Brenda & Ron Cunningham
Realtors, Homes for Sale - Phoenix Metro
West USA Realty

Ronald - It really is a big mistake!  Sorry you had to go through this too!

June 10, 2011 03:48 AM
Rainer
170,311
Ed & Barbara Heiser
VA FHA USDA & Conventional Home Loans
Wallick & Volk

Dead on Breanda,  way to often the lending side is overlooked. Odd how one can think (or not) that you can't buy with out the money!!!! In many cases, we find that it is taking a month or two to clean up and sort out credit issues. So many never look at their credit until the last moment and are shocked to find many mistakes and blemishes. A visit with your experianced Mortgage Profesional BEFORE hand will save time, trouble and heartach!

June 11, 2011 10:39 PM
Rainmaker
64,994
Brenda & Ron Cunningham
Realtors, Homes for Sale - Phoenix Metro
West USA Realty

Ed & Barbara-  totally agree with you!  People don't realize how much stress could be avoided if the do this first!

June 12, 2011 07:17 PM
Anonymous
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Rainmaker
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Brenda & Ron Cunningham

Realtors, Homes for Sale - Phoenix Metro
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