What is a "Schedule A"?

How does buying work when you also have a home to sell?

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There is no doubt this is the most frequent question we get and, admittedly, it is the most stressful and confusing part of buying a new home when you own another that you must sell in order to buy.

This is where having a great realtor to review your unique scenario and discuss strategies is critical. 

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When you have a home to sell as a condition to purchase your new home, it is known in the industry as a "Schedule A". (Familiarize yourself with this term now; it's important!)

Here's the basic process: 

1. You prep your current home for sale. Ideally, you have your home listed before you find the home you want to buy, but that's another conversation for next week.

2. You make an offer to purchase the new property subject to the sale of your home.

As such, your offer will have two special conditions:

• A timeline for how long you have to receive a firm offer on your sale. This might be days, weeks, or months.

(A firm offer means your finance and home inspection conditions are met. Other conditions may also apply).

• A bump clause where the seller of the home you have offered to purchase can accept another offer while you are trying to sell your home. This clause is typically 24-72 hours. This bump clause protects you in the case you can remove the condition to sell your home and provide a clean financing letter - meaning you can buy the home without needing to sell yours; AKA you are approved for both mortgages. Basically, you can think of it as you have first right of refusal. 

Many times, buyers are unable to do this as they require the cash from their sale to buy their next home, and/or are not approved to carry both mortgages. In this case, if you cannot "remove your Schedule A", once you received a bump notice you would forfeit your offer, and the sellers would officially accept the offer from the other party.

3. Should you make it to the finish line, your sale must close first and your purchase second. Every effort is made to have this happen on the same day, so you can have your moving truck packed the day before closing then unload the following day once both properties close. 

This is a balancing act, and doesn't always go smoothly, so we will work with you on putting together contingency plans for closing delays. (A simple one is to rent the moving truck for several days.) 

Clear as mud?

This is why you need a great realtor.

Reach out and chat to us about your situation.

Stay tuned next week for when we discuss timing options for selling your home to avoid being bumped!

Ready to chat? Reach out.

Nicole Darbaz, REALTOR®

Your Trusted, St. John’s Metro, Real Estate Expert

Keller Williams Platinum Realty

709-691-1373

NicoleDarbaz@kw.com

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