What is Concurrent Closings in Real Estate?

by | May 28, 2021 | Real Estate Insight | 0 comments

Full Description Below:

How does selling and buying a home at the same time work? What is a concurrent close in real estate? How is the concurrent close process?

In this video, I will be sharing to you what is concurrent closings!

If you want more Real Estate Tip, Home Buying, Home Selling, First time home buyer tips, consider
SUBSCRIBING!

🚨 Subscribe to this channel here:
https://www.youtube.com/channel/UCCPU…

Reach out and learn more:
Andrew Oandason
📲 Call/Text Direct at (707) 364-5589
📲 Email: oanadason@gmail.com
👉 Facebook Handle: Andrew Oandason
https://www.facebook.com/andrew.oanda…
👉Instagram Handle: @andrewoandason
https://www.instagram.com/andrewoanda…
👉LinkedIn Handle: Andrew Oandason
https://www.linkedin.com/in/andrew-oa…
👉Twitter Handle: @Oandason
https://twitter.com/Oandason​
👉Youtube Channel: Andrew Oandason
https://www.youtube.com/channel/UCCPU

Full Transcription Below:

Different factors.

And so typically when you’re buying a home, a conventional

loan is a little bit stronger than a FHA loan.

Andrew, what’s a concurrent closing?

So concurrent closing is when you already own a home and

you’re in the process of selling it and buying another one.

And so, you know, depending on the market, sellers are always

kind of thinking what’s best to do is to look for the replacement

home first or to focus on selling their home.

And really, right now, in this market, it’s a seller’s market,

which means the likelihood of getting a buyer is pretty strong.

And so I would recommend anyone’s considering selling a home

and buying a home at the same time to lock in your buyer

first. And so what that means is you’re going to have to

compete most likely on when you put an offer.

And so if someone’s offering on a home without having to

sell, in theory, that’s going to be a stronger offer.

But if you already have a buyer locked in and it’s going

to be buying your home, that’s actually really good.

And so that’s what you want to do is you want to line up

the buyer in your home first, and your offer is still going

to be contingent on the sale of your home, because that’s

where your proceeds are coming from for the down payment.

But the likelihood of that happening is very strong.

Okay.

I own one house.

I want to go buy another house.

I know in the market, people have been having trouble.

Like, if I saw my house, where do I go?

Like, all the houses are getting snatched up, which creates

this interesting paradox within the market.

So basically, you would recommend me to get a buyer from

my current house that I own and then go out and find another

house. Correct.

Got it.

And then another thing that’s very common is basically request

for or possible rent back.

So you would sell your home, you’d cash out your proceeds,

and then for maybe a month or two, you would pay that person

rent for the home that you’re already in while you’re trying

to complete the purchase on your home.

So you don’t necessarily need to have a home in contract

at the same time.

But the likelihood of you getting your offer accepted when

needing to sell your home, it’s going to be a little harder.

So Let’s say you sold your home and you cashed out.

Now you can do a rent back.

And then when you put an offer on the next home, you would

not be contingent on the sale since you already completed

the sale.

So that’ll put you in a better position.

Okay.

Could you give an example?

The example would be, rather than having to complete the

sale of your home before you you can buy the next one, Let’s

say the buyer in your home at the last minute lost his job.

So he had to cancel the purchase.

Well, in theory, it’s putting in a position that you have

to cancel your purchase now because you don’t have the money

to close on the next house.

But if you were able to sell your home completely and then

have the option to stay there for two months and pay rent,

right. So now you have all your money that you need to buy

the next house.

So when you put in the offer, you would be leaving out the

part that is contingent on the sale of your home.

So now you’re eliminating a portion of risks to that new

seller. Yeah.

Like when you put your offer in, does that tend to help an

offer? Is it strengthen the offer or what?

What have you seen?

There’s just different layers to it, so that just adds another

layer of risk outside.

So the typical first time buyer, they use an FHA loan and

a lot of listing agents a little it’s getting better.

But they used to be kind of weary about those.

And the reason why is because those banks tend to be a little

bit more conservative on the appraisals, since the Bank is

running almost all the money.

And also those people typically are right on the edge of

qualifying the are buying their first home.

They’re scraping up the screen.

Even of all their pennies, they’ve been working on their

credit. They’re getting everything in order to buy a home,

which is great.

But sometimes they’re barely qualifying.

So if anything were to change, Let’s say the rates go up

a little bit.

It changes their debt to income ratio.

Maybe the underwriter calculates their income a little different,

and they don’t.

There’s just different factors.

So typically when you’re buying a home, a conventional loan

is a little bit stronger than an FHA loan.

And then in some cases, you have all cash offer.

And in this market, what we’re seeing is even though it’s

all cash offer, they’re still offering full price or more.

So it’s not like they’re asking for a discount.

So that’s going to be another layer.

The other thing that’s happening a lot right now is a waiver

of contingency on inspections and even appraisals.

So Let’s say, for example, your home appraised at 500,000

dollars. But I offered you 520,000 dollars.

So what that contingency removal means is that I’m willing

to pay 520,000 dollars.

So they have to come out of pocket the extra 20,000 dollars.

So we are seeing that in today’s market, when directly more

houses come back in the market, the sellers won’t have as

strong of a hand or a little power should shift back to the

buyer. It should, theoretically, but we don’t know.

We don’t know what’s going to happen.

Yeah, that’s Super interesting.

So for concurrent closings, what success stories have you

seen for concurrent closings?

Have you seen a concurrent closing work before?

They do, but they have different layers of everyone’s timing

is different.

Right.

So depending on the house that I’ve seen, multiple people

concurrent closings at the same time, which means you’re

buying a house, that person is buying a house, and they’re

all occupied and everyone has on different time tables.

You know what I mean?

And so, Yeah, it takes a lot more planning involved when

you’re doing concurrent closings whenever there’s a vacant

house, and it’s a first time buyer that’s usually a Slam

dunk. No one’s waiting on the house to be available.

And as soon as it closes, the buyer can move in.

But Let’s say we had one, for example, where the seller was

retiring from a County job and they are moving out of state.

But I guess part of the requirement was she was finishing

out her vacation time because she was retiring.

He’s cashing out her vacation, which meant she had to stay

local for some reason.

She couldn’t leave the state because she was cashing out

on her bed case in time.

Something like that.

Yeah, it was interesting.

So basically she had to stay there for a while.

So my buyer bought the home, but then people were waiting

on her home to move into.

And so it was like this multiple step of everyone’s trying

to move, but people are being held up by one person.

So it sounds like conquering closing.

It could be tricky, but it can be done.

It can be done.

Yeah, it can be done.

It happens all the time in awesome.

Well, what advice would you give someone if they’re thinking

about if that’s going to be the situation, like your current

closing? Well, the first thing, like any other purchase is

getting pre approved and knowing how much proceeds you need

from the sale to qualify, because a lot of people think right

away, if I’m selling a house, I’m going to qualify for the

next house.

Well, there’s more to it than just down payment.

You still have to look at your income and your other debts.

So putting 20% down on the home is great, but you still have

to qualify for the payment.

So that’s always the first step.

That’s Super interesting.

Yeah.

I wouldn’t think that either.

I would just like, I have a 500,000 dollars house.

Of course, I could buy another 500,000 dollars house or,

like, 600,000 dollar house.

Like, not that much more.

Yeah.

It happens all the time with people that rent.

So people that rent, Let’s say they’re paying 3,000 dollars

a month in rent, and they think I’ll be able to buy a house,

no problem, because I’m affording the 3,000 dollars rent.

And once they look at all their finances and their liabilities,

they might only qualify to buy a house for 2,400 dollars.

But sometimes that kind of upsets the buyers because they

feel like, well, we’ve been paying 3,000 dollars long.

Why can’t we buy something?

Something for at least 3,000?

But it just depends on the out of how much you qualify for.

Yeah, that’s Super interesting.

It’s like, Where’s the other six hundres going, man?

Yeah, it’s like a math equation.

Awesome.

Okay, cool.

Cool.

Yeah.

Anything else you want to share about concurrent closings?

No, it’s just part of the process.

And so communication is always really important, letting

everyone know what the time table looks like, and not everyone

can plan accordingly to it.

Yeah, that’s good.

Cool.

Thanks for sharing to info concurrent closings.

Yeah, you’re Welcome.

Yeah, cool.

Thanks for watching my video.

To learn more tips and tricks how to save money or make money

in any real estate market.

Please like and Subscribe.

My goal is to keep giving you valuable content that you can

use any questions.

Please comment.

Thank you.