Rarely do things go as smoothly as we would like if it was a perfect world, right? This applies especially to the timing of selling a home and buying a new one. For expired listings in Manhattan, they may be frustrated and want to go out and buy before re-listing their home and actually selling it. However, one of your jobs as a realtor attempting to bring them on as clients is to be up front about the facts. It’s better and easier in the long run to sell first and here are a few reasons why.
1. They run the risk of having to pay two mortgages.
If your expired listings go ahead and buy before they’ve sold their property, it puts them in a tricky space. If it doesn’t sell as quickly as they’d hoped, if some unfortunate maintenance task arises with one of the homes, if there’s a job loss or other financial difficulty, they now have to carry two mortgages with all that extra pressure. It can put stressed and overwhelmed clients into an even more intense situation.
2. They might have trouble obtaining a second mortgage.
Because lenders don’t consider whether or not an applicant is planning to sell the other property, the client’s debt-to-income ratio will be affected. The lender just sees that they already have a mortgage and are applying for a second. They assume the applicant will keep both properties and so this majorly affects whether they will even qualify for a second mortgage. It may prove to be more of a hassle than it’s worth.
3. They could lose out if they can’t put in a competitive offer.
It can be very difficult to qualify for and pay for two mortgages. This may mean the expired listing client wants to put a contingent offer in on a house. This way, their offer for the new home is contingent upon their first home selling. But sellers are, of course, wary of these clauses. If they accept the expired listing’s offer, they are taking a risk as well in hoping the first property sells quickly. For this reason, advising your client to wait till they’ve sold means they will be able to put in a more competitive and appealing offer.
4. They may bank on a certain price and overextend themselves.
If they are relying on receiving their full asking price on the current home and put an offer down based on that price, it could lead to trouble. Sometimes with the market fluctuations the seller may have to come down a bit on price. This is normal. But if they put in a hefty offer on a new home based on what they want to sell for and then end up not having enough, it puts them in a tough spot.
These are just a few reasons to give to your expired listing clients who may be itching to start putting offers in on new homes before they’ve sold. It’s understandable that they’re frustrated and tired of waiting. But if you outline how you plan to help them sell successfully, they may settle enough to wait it out. This could be a much smarter move for them in the long run.
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