How to Sell Your Home and Purchase a New One in Another State

The real estate market across the country is one of the best markets that most of us have experienced in recent years with the global health pandemic being a catalyst for many of us to prioritize our living situations. Millions of people in the last 12 months have decided to relocate from their current city to another state, since many people have the ability to work from home or their work arrangements are more flexible than ever before. The last time America has seen people relocate at such high numbers was back in the mid-nineties. If you’re one of those people considering a move to another state and you want to sell the property you’re currently living in, this is the article for you. Let’s face it, not everyone wants to be a landlord or hire one by holding on to their current residence and some of us may need the money to sell first before we are able to purchase the next house. If it’s a better quality of life, good weather all year long, or being closer to family, that you’re after in the new destination state, this is a great resource to show you the steps on how to sell your home and purchase another home in a new state.

Make a Plan and Plan to Budget

First step to selling your home and buying a new one in another state is to determine whether or not it makes sense for you to purchase the new property first in your desired destination or if it makes more sense to sell your current home first. In most cases it’s almost easiest to sell your existing home first and then purchase a home in the new state, however not all situations will be the same, so consider a few factors before deciding 1) Do you have the funds or have access to get the funds (more on this later) to make a home purchase in the new state (funds needed will be for down payment, closing cost, movers, carrying costs of existing property and new home) without selling first 2) Are you looking for a very specific property in the new state that might make your home search take longer  3) Do you have a specific timeframe that you need to relocate to the new state, i.e. you have a starting date for a job or you would like to get your kids settled before school starts.

All of these factors will help you determine which makes the most sense for your relocation. If you’re looking for a very specific and unique property or being settled in somewhere is a top priority, purchasing a house in the new state might be a better way to go than selling first. Either way you will have to determine which method would work best for your situation and family then budget for it. Here are some factors you should consider when budgeting for your move:

·         Will you stage the home for sale?

·         Cost to Make Your Home Ready for the Sale?

·         How much you need to net from the sale of your home?

·         Cost of Movers?

·         Carrying Costs of holding two properties at once (if you buy first)?

·         How much is the downpayment on the new home?

·         How much are the Closing Costs for the new home?

·         Costs of trips to and from destination city to view homes (if you buy first)?

·         Costs of transporting vehicles if driving is not an option?

Hire a Realtor

Relocating to a new state doesn’t have to be stressful, especially when you have a professional there along your journey helping you through the new chapter in your life. Hiring a realtor for the sale of your current home can help you get your home sold quickly and for the most money possible. This is especially important when relocating because you don’t want your home sitting on the market for a long period of time, not only will it cost you lots of time but it will cost you money too. You will also want to hire a realtor in your prospective city; it will help you maximize your time and efforts in learning the market there and making the transition to the new place that much easier. Realtors are bound by a code of ethics that when we are hired we are obligated to hold your best interest in any deal. 

Start Your Home Search

Even if you decide to sell your home first before purchasing, make sure you are using home search apps like Zillow and Realtor.com to search for homes in the area you’re moving to. This is a great introduction into learning the types of homes that are offered in that area at what price points. If you’re able to visit your new city for a home search, take a trip to the area, line up some open houses for the weekend and go explore some neighborhoods that you might be interested in learning more about. If you don’t have the ability to make a trip to the new city, consider contacting a realtor in the new city to do some virtual neighborhood and home tours for you. Depending on what specific needs you have in a home, the average home search can take 3-6 months from when you decide to buy to when you close on a property. This timeframe could take more or less time depending on the local real estate market and how aggressive you are with your search. 

Selling Your Home

When relocating to a different state, make sure that you are able to sell your current residence quickly and for the most cash you can in the market you’re selling in. To do that, consider pricing the home competitively to get attention from prospective buyers and more importantly offers…quickly. This could even generate a multiple offer situation if you’re in a seller’s market allowing you to sell for top dollar as well as fast.

Another option would be, to ask your prospective buyers for a rent back. A rent back is a clause in the real estate contract that permits the seller to rent the property back from the buyer once the home closes. Usually, most buyers will not opt for a rent back that is several months but you may be able to get away with a maximum rent back of 2 months (especially in a sellers’ market) to allow you to continue to look for your new home in the destination city.

If you have enough equity in your current home you can use a HEL, or Home Equity Loan or even a Bridge Loan to help fund your new home purchase while your still living in your existing home. Both options can help fund the downpayment, closing costs, movers, etc.…if you’re short on savings. The HEL, can only work if you have substantial equity in your property that you will inevitably have to pay back once the house sells, since you will be borrowing against the home. Bridge Loans can be used as a temporary loan option, by using your exiting residence as collateral until you’re able to secure financing for the new home in the other state. This can be a viable option, but keep in mind this type of financing usually carries higher interest rates and is only good for up to one year or less. This will also create two payments for you, one for the bridge loan and the other for the existing mortgage until the home is sold. 

Lastly, you can always consider renting in your destination city for some time before making a purchase. There are plenty of options for short term rentals or you can rent for up to a year to give yourself more time to explore neighborhoods and areas.