Step one, have a realtor do what we call a CMA or “comparative market analysis.” In our area, a realtor will provide that to you at no cost. That involves our providing a detailed analysis of your property based on active, sold, and more importantly expired listings in our local Multiple Listing Service (MLS) system. Adjustments for differences are made, and you should be given a good idea of what kind of sales prices you should get in addition to what you should net after commission and closing cost expenses. We choose properties that most closely resemble yours in as many aspects as possible (style, age, quality, size, lot size, condition, features, etc.). The Actives show what we are competing with, solds (in the last six months) more likely reflect what you will actually get for your property and the expired show where likely you may not want to price it. Expired listings often do not sell because they are overpriced. Most realtors will provide a price range as it is really not possible to give an exact figure. Once that is established and it looks like you have a profit (or break even or come up with extra cash) it is time to contact your local lender. Just a note here, we are not licensed appraisers. If you have a very unique property and comparable properties (“comps” ) are difficult to find, you may want to consider paying for an appraisal as licensed appraisers are better qualified to provide a more accurate value.
Step two, call your local lender and get them to do a loan pre-qualification and let them know what you are expecting to net from your current home. Once you know what you can qualify for then you can start your search to see if there is something out there in your price range that will better suit your needs. If it looks like you have some possibilities then we can move to step three!
Step three. Here is where it can get tricky. In this area unless you have a property in a highly desired area in excellent condition and priced very well, it is tough to get a seller to accept a “house to sell” contingency. When negotiating for your next purchase it is much better to have a “house to settle” contingency, which means you already have a contract on your home. Ideally, the best situation is that you have a temporary place you can go just in case you cannot work out a “back-to-back closing” (sell and purchase the same day), but most folks don’t have that luxury. My suggestion in that case is to get your house listed once you have located a few potential properties to purchase. The realtor could make your sale contingent upon your “locating a home of choice”. That could mean that your buyers agree to allow you a set time-frame in writing to get something under contract to purchase, or… if your buyer is agreeable, just set the closing out as far as possible to be sure you can locate something (lots of buyers do not want to wait). It can be done, sometimes more smoothly than others, but we do it all the time. It does take a lot of coordination and patience!