Are you selling your house and moving to another state?
Life sometimes leads to circumstances when you need to relocate from your home state. In a perfect world, most of us prefer to sell our current house prior to moving. Paying for housing in two states is a financial burden and managing the sale of your current house at a distance is a headache.
Unfortunately, selling in advance of moving isn’t always possible. Moving out of state before you sell your house doesn’t work if you need the cash from closing on your current home to to pay for the move and get new housing.
You also be wondering how to move to another state and buy a house in that area. Buying a property involves plenty of costs. Leaving your current job to move? Buying a house in another state without a job means getting your financials in order ahead of time. Ask yourself: should I buy or rent when moving out of state.
Take control of the situation by following some of the simple steps outlined in this blog from 365 Property Buyers!
Why Sell a House When Relocating To Another State?
Wondering if you should sell a house while moving to another state?
Let’s dive into the reasons why it can be essential to sell during the process of relocating to a new state.
Expensive Relocation Costs.
The primary reason to sell a house while you’re relocating [particularly if you to sell and buy another house in a different state] is the financial side of the process.
As we all know, buying a house is not cheap. You may be moving into a market where you need to make a cash offer to be competitive. In that case, most of us need to sell the equity in the house we live in to buy our next home. Even if you’re in a market where an offer with a mortgage is fine, you’ll still need to afford a down-payment and may need to tap the equity in your current property for that down-payment.
Let’s not forget – when you’re moving to a new state – there can be some tough money situations. You may not have a job lined-up and in a period of limited income. There are moving and relocation costs, costs to furnish your new place. Buying house in another state without a job will require savings.
Even if your plan is to rent in your new state, you likely have to come up with security deposit and first months’ rent.
Double Ownership Payments.
Owning one house can burn a hole in your pocket . . . imagine owning two?
There a lot of costs of ownership. You have ongoing taxes, utilities, maintenance, mortgages and debts, and insurance. It can cost thousands of dollars to be a homeowner every month and those monthly payments aren’t going anywhere. If you move and don’t have the sale of your old house completed, those costs are going to keep ticking away every month. This is particularly expensive if you have a mortgage on the house that you’re moving from.
So think about it.
You move to this new state, you’ve got a new house, you going to have all the costs of home ownership or renting in the new state, and then you still have the cost of the mortgage on your old house, right?
Once you factor it all in, most of us can’t really afford to keep the cost of living up in two different states.
Risks With Vacant Properties.
Is your house going to be vacant if you sell it and relocate to another state?
You could get stuck with a vacant house without careful planning. Owning a vacant house – particularly if you moved to a different state – raises some very serious concerns. Empty houses are susceptible to a lot of bad outcomes.
What happens if there is an unanticipated problem at the house? Pipes burst, roofs leak, pests break in, electrical problems, weather events can damage windows or sheds in the backyard. You could have a friend, family member, or property manager check in periodically, but if a pipe breaks, water is going to be pouring in and that’s just going to keep going until someone stumbles by and notices something.
Unforeseen disasters at a house are part of life. If no one is around, they can spiral from a little to big problem.
Another risk is thefts at the house – particularly if you were not able to move all your belongs out when you relocated to another state. Vacant houses are easy targets. Although it’s obvious to take expensive personal items, people often take central AC, windows, and copper wiring. Vandalism is an additional concern. At a minimum, you should install a security system to notify you of any new problems.
Job & Employment Opportunities.
A major reason people sell and move to another area is jobs and employment.
Perhaps you unexpectedly are offered a dream job or huge pay raise. Maybe you were laid off and need to re-establish your career. Companies may just tell you they are relocating and you need to transfer or leave your position.
You may be forced to sell quick in any of these employment situations. As noted above – relocating and getting new housing is pricey – funds from selling your current home may be required. Hopefully, the new job and income is worth the move!
If it’s an opportunity you can’t pass up, selling your current house while moving to the new state may be the most straightforward way for a successful transition.
How To Sell Your House When Moving Out of State
Selling a house while relocating to another state isn’t easy. It’s a lot more complicated than moving to a place in the same neighborhood.
Let’s discuss how to do it, what makes it different, and some tips and considerations to make the move as smooth as possible.
Drive a Fast Sale With Aggressive Price.
Setting your price point is a major consideration when you intend to sell the house and buy another in a different state.
Typical, when you’re planning a move, you want the sale to go faster than the average sale in your market. The way you do that is pricing it aggressively.
So, you might want to price it slightly below the comps that are going on the market. Your sale needs to be much more attractive than what’s currently on the market.
It’s not all about a low “list price” – there’s a few ways you can go about speeding up the sale by accepting a bit less on net sale proceeds.
Although you certainly could just set list price a little bit lower and that will get the job done, you don’t have to take that approach. You could leave list price a little bit higher, see where the offers come in, and accept one that’s on the lower side if that is the best you have.
Or you can keep it high and slowly do a reduction of a certain amount each week until you get a buyer that’s going to go for the price. Price point is the key to getting a sale done a lot faster.
Do you want to sell ASAP in preparation for your big move? We here with the 365 Property Buyers make cash offers and closing quick and easy. Click here to learn how our “4 Step Home Buying Process” works ⚙ to put cash in your pocket ASAP ➡️.
Timing The Sale.
There are two “nightmare” scenarios when it comes to selling your house to relocate out of state.
You could sell too fast and not have housing lined up to move to. Or, you could sell too slow, and not have the money (or get stuck with two houses) when you absolutely need to move.
Because look, if it gets to your sale date too soon of your current house, your relocation might not be ready. Presumably, when you’re going to relocate from the state you’re in, you are going to be buying a house or renting in a different state.
And, vice versa, it could be a problem if your sale of your current home takes too long. You may need the sale proceeds to buy another house out of state or you might need it for securing a new rental. Funding may be required for down-payments, security deposit, first months’ rent, on-going rent, furnishing a house or a rental in the other state.
Timing it – unfortunately – may prove difficult and you could end up in a tough situation where you need to sell but can’t move yet. There’s a couple of things you can do to address timing.
Asking For A Rent Back.
A “rent back” from the person buying your house is a great solution if you end up having to sell your house too soon and your new accommodations out of the state are not ready you.
Basically, the buyer becomes the owner and they let you stay for two or three months or however long it’s going to take to line up your sale and in most cases you’ll then pay the new owner rent.
A “rent back” works out for both the buyer and seller.
The new owner gets to buy the property they want, and you get a period of time to stay where you are until you can arrange the move with the financial proceeds from the sale to make it easier.
Flexible Closing Date.
Another option is to ask for some flexibility on the closing date.
The buyer of your home might be flexible. It might not be a big deal if they close this month or next month. Don’t be afraid to ask them for flexibility on the closing date so that they can work around your schedule in terms of when you need to move.
Buyers are open to giving you some leeway on closing date if they are in a situation where they don’t need the property immediately.
In fact, if you need to move before the sale can be completed, you could ask the seller for help with relocation costs. Usually, this takes the form of an advance on sale price. At our company House Heroes, we often buy properties from sellers that need some relocation costs. For example, transportation, movers, security deposits, down-payments. We’re glad to help.
One reason buyers are willing to advance relocation costs is because the buyer will be able to purchase the property vacant. The buyer can get the ball rolling faster whether they are moving in or renting it out, and you can start your new life in the new state sooner rather than later.
We here at 365 Property Buyers are open to work with sellers on closing dates, “rent back” arrangements, and advancing some sale proceeds if it helps.
Plan Ahead & Carefully Budget.
I highly recommend planning a head given the complexity of selling a house and moving out of state. Simply put – it’s difficult to relocate to an area you are not familiar with and sell your current home at the same time. Expect road blocks and challenges.
You might need to fly out there ahead of time. Seeing a house or rental in person is preferably than just looking at pictures on line. You might need hire local professionals help you line up new accommodations. If it’s a new area to you, it’s possible you don’t have friends and family locally to help with an easy transition. If you’re going to sell while you’re relocating to a new state, thinking and planning in advance will help tailor the process to your personal needs.
Part of planning is budgeting.
Figuring out each and every cost you might incur is incredibly important. As noted above, there are plenty of costs with any relocation, and you don’t want to be left short on funds. Whether it’s moving costs, the additional costs of owning two properties (utilities, taxes, insurance, maintenance), or deposits on your new place – make sure you are prepared.
In summary, when you’re planning the big differences between a move nearby and out of state is that you’re going to have to price it aggressively to make sure the sale is relatively quick. You want to time everything right and you can use rent backs and get a flexible closing date. You want to plan ahead of time to set up the housing in the other state and makes sure you have enough cash on hand to complete your move so you’re not stuck in the bad place where you can’t afford it once you get there, or you’re waiting too long for the sale proceeds from your house and can’t move on time.
Alternations To Selling When Moving Out of State
Selling a house while moving to another state isn’t always possible.
One reason it might not be possible is that you don’t have equity in the house yet. Perhaps the amount you owe is making it difficult to sell and get enough sale proceeds to afford all the costs of the move. Maybe it’s a neighborhood that doesn’t sell well, or the house needs considerable amount of work that only a small pool of buyers can handle.
If your house needs some work before selling, consider selling “as-is”. The advantage here is to save the frustration of renovations, the money spend on the repairs, and close at a faster date.
What are your options if you’ve got to get out of the state, and you can’t sell?
Keep It As A Rental.
The most obvious option here is to use the property as a rental property.
Rental property has some great upsides. At 365 Property Buyers, we buy rental properties and hold them with tenants. If the investment works out, you will get a monthly payment each month.
Remember: your old home has now transformed to an investment property. You will need careful planning to ensure the rental goes well (you don’t want to lose money every month due to bad planning or decision making). There’s a few steps to this.
Figure Out The “Cash Flow”.
Want to make sure you’re rental property works out? Figure out what the rent should be based on the market, and then determine your holding costs.
Holding costs add up quick! Every month you get hit with costs for repairs, utilities, maintenance, insurance. Mortgage payments make the monthly bills even higher.
Successful rental houses should have “cash flow.”
“Cash flow” means the rental incomes are larger than the costs of ownership. If you have no “cash flow”, you will be in the unenviable position losing money every. That’s not much of an investment!
Consider a short-term rental such as an Air B&B if the numbers don’t add up for yearly leases. Air B&B in the right markets can net quite a bit more monthly income than being saddled with the same tenant all year long. Once you take the time to set up the house as an Air B&B, you could be in better position to sell it. Investors are attracted to the high cash flows Air B&B’s provide.
Search For Local Property Managers.
Is the house your relocating from in a rural area?
Is the population small?
Not too many nearby real estate professionals?
If you answered YES to any of those question, you probably don’t have the local support to keep the house as a rental.
Search online for local property managers. A property manager is critical if you live remotely. Property managers find tenants, collect rent, and oversee maintenance. Typically, they charge you a small percentage of the rent.
Call about 5 or 6 companies and ask if they provide services locally. You may learn right away that property managers don’t work in the area. Keeping the house as a rental without a local property manager is doomed from the start if you have relocated out of the state.
There are some drawbacks to holding a rental. You could make mistakes or mismanage if you’re not an expected landlord [and lose money on a monthly basis]. Another problem could be if you’re in a declining market. Areas with low economic and population growth could spell a big loss of the value of your house. Rentals are much better long term investments in areas of appreciation or at least stable prices.
Be careful about installing a tenant if you intend to sell in the future. The house will not be very attractive to new owners if the tenant makes it impossible for home buyers to move in.
Keep It As a Vacation Home.
Another strategy if you can’t sell a house while your moving to a new state is to keep the house as a vacation home.
A vacation home makes sense if you still have friends and family in the area. You can take trip backs regularly without the costs of a hotel. You’re friends/family may also be able to have a use for it.
Keeping a vacation home doesn’t mean you have to rule out renting. You could rent it in the summers in beach areas, or in the winters for skiing areas. Just don’t sign a 12 month lease if you want to keep open your vacation options.
If your looking for a direct sale of your Arkansas property or explore your options, give us a call anytime at (501)369-0365 or fill out the for below
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