It can be exiting to buy a new home. However, if you are trying to sell a home at the same time as buying it can be stressful, especially if money from your current home’s sale is needed to put toward your next home. However, with a little planning and working with a savvy real estate agent can ease the process for both of these transactions.
To keep your sanity intact, here are some tips to help you manage the process.
Assemble a Team
You’ll want experienced professionals guiding you through the many steps and paperwork involved in buying and selling simultaneously. We can give you a realistic estimate of home prices in your area as well as guide the pricing of your current home. Such advice will help you calculate how much equity you have and what net proceeds will look like to apply towards the down payment and closing costs of a new home.
Working with a really experienced realtor makes a huge difference. There are a lot of moving pieces. We have a proven track record in this market and experience across both buying and selling. Using the same realtor for both buying and selling will help the process go along more smoothly.
Consider Your Financial Position
Concurrent closings, where you sell your home and close on your next place happens in the same day or within a few days, is ideal. However, things don’t always work out that way. If you find yourself without the necessary funds to close on your next home, you could wind up paying two mortgages for a while or worse, lose the final approval for a mortgage potentially losing your next home.
Ask your realtor about including a contingency in your offer if you don’t have enough to cover two mortgages at the same time. A contingency gives an escape route in case the sale of your current home falls through.
Factor in the Market
The conditions of our local housing market determine how to buy and sell homes at the same time.
In a seller’s market. Even though we are in seller’s market right now, make sure your home is spiffed up or staged and ready to sell. This will make the selling process go smoother. If your current home is priced right and shows well, it will likely generate a lot interest in today’s market. You can be more selective about which offers to consider, particularly preferring those with a strong offer and some willingness to meet your time schedule.
On the buying side, make sure your finances are in order and get pre-qualified in order to make a quick offer on the home you want to buy. When conditions are favoring sellers, there is less flexibility to include contingencies or negotiate the closing date, especially if a seller needs to move quickly.
In a buyer’s market. If we should shift to a buyer’s market, it could take longer to sell your home. You may want to wait until you have a committed buyer before making an offer.
On the buying side you have more flexibility to include a contingency that relieves you of the deal if the sale of your current home doesn’t go through.
Discuss the timeline, not just the money
Consider the closing process when negotiating both deals.
Ideally, you want both the buyer of your house and the seller of your next home to have adjacent closings and necessary contingencies as close together as possible. Your realtor is key here- finding the right deal and expressing the closing date needed. If the dates don’t align, you could find another opportunity, or go with a backup plan.
Make a backup plan
The reality is that one or both of your transactions might fall through completely no matter how carefully you’ve planned. If you have contingencies in your contract, be prepared to reschedule the closings accordingly or walk away with minimal financial hit.
However, on the buying side, you may not be able to include many contingencies in today’s market. So, have are some back up plan options just in case:
- If you sell your current home but haven’t found your next place, be ready to find a short-term rental. If you have a lot of belongings that won’t fit into a rental, factor in the added expense of renting a storage unit.
- In case you need to remain in your current home for a short time after closing, ask the buyers for a rent-back agreement. This means you pay rent to the new owner until you can move.
- A home equity line of credit or a bridge loan over the short-term can cover the costs of your next home’s mortgage, or make payments with savings as an alternative. Factor in the payments on a short-term loan into your budget until your house sells.
- Until you can sell your home, rent out your current home using the income to offset the expense of owning two homes at the same time.
The bottom line
It can be a challenge to sell your house while trying to find a new place at the same time, especially when dealing with work and family obligations. The best advice is to work with an experienced real estate agent to ease the transition and maintain communication with all parties involved. Before starting the process, check your credit and get your finances in order, so that when you do find your next home, you can take action quickly.