Buying and Selling a Home at the Same Time
Unless you are a first time homebuyer or opting to give up homeownership and rent instead, you will likely be trying to navigate buying and selling a home at the same time. Doing both at once might seem way too stressful, and it can be a bumpy ride. But people manage to get through it all the time.
While there is no guarantee that the sale and purchase will go off without a hitch, there are things homeowners can do to make sure the process goes as smoothly as possible.
The Ideal Buy/Sell Scenario
In a perfect world, a homeowner will accept a great offer on their house at the same time their own offer is accepted on another house. Closings on both houses will happen within a few days of each other and everyone lives happily ever after.
When this happens, it is part luck, but most likely there is some preparation—and a dedicated, experienced agent working tirelessly to make it work. But in some cases, things happen that delay closing for one property or the other. Financing can fall through or a house might not pass an inspection. Or, a homeowner might struggle to find a new house that suits their needs. Or, they might have trouble selling their old house.
The better prepared they are for the possible pitfalls, the easier it will be to push through to a successful closing for both the old and new home.
Know Your Risk Tolerance
There is risk involved when buying and selling a home no matter what. Homeowners need to consider which scenario causes them more stress: Buying and not being able to sell, or selling before finding a new place to live.
Buying too soon could leave a person with two mortgages and two properties to take care of. Out of desperation, the buyer might accept a subpar offer on the old house.
Selling too soon could leave a family without a home. Expenses for temporary housing and storage can add up, not to mention the bother of having to move twice. They might be tempted to settle on a house that is overpriced or otherwise not quite right for them.
Thinking about how to deal with the “worst case scenario” is not negative; it is realistic. Understanding which situation is most manageable for the family can guide whether they focus more attention on buying or selling.
If money is not an issue, for example, holding two mortgages for a short time might not be too great a burden. Especially if they’ve found their dream home, they might go ahead and make an offer and worry about selling their old home later.
Or, perhaps a great offer comes along and the seller has someplace to stay until they find a suitable house. Not only will they avoid feeling rushed into a purchase, they will also know the exact amount of the proceeds that they can spend on their new home.
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Tips For Buying and Selling a Home At the Same Time With Ease
Seller’s stress is different from buyer’s stress, so doing both at the same time can mean doubling the anxiety. Luckily, there are things one can do to reduce the worry and prepare for navigating two real estate transactions at once.1. Understand the Market
In a strong seller’s market, houses often sell for way above the asking price. Homeowners will have no trouble closing on their old house. But when buying and selling a home at the same time, those same market conditions could frustrate their efforts to get an offer accepted on a new house. The opposite problem will happen in a buyer’s market.
Knowing where the market stands—and where it is expected to go—can help in formulating a strategy for both sides of the transaction.2. Be Flexible But Know Your Limits
Managing a purchase and sale simultaneously requires flexibility. People need to balance patience with being ready to act when the right opportunity presents itself. Understand that the entire process is a negotiation. It is best to stay flexible and ready to compromise.
At the same time, having well-defined boundaries is important too. For example, know just how far to comfortably stretch the budget or lower an asking price ahead of time. And being clear about a house’s deal breakers will help buyers and sellers stay focused. For example settling for something outside the preferred school district could prove to be a mistake if the kids are unhappy changing schools. Or if three bedrooms are truly necessary, it makes no sense to settle for two.3. Be Clear About Your Financing
It is important to have pre approval for financing before shopping for a home. The more a person is counting on the proceeds of their sale for their purchase, the trickier it will be to get financing in order. Lenders may not approve a loan if there is any doubt that the old home will fetch a sufficient sales price. If there is a chance that the borrower will end up with two mortgages, the bank is likely to want them to have a substantial salary and savings to afford it. For example, they may want proof that there is six months worth of payments for both homes in the bank, and a hefty downpayment.
One option is to get a Home Equity Line of Credit (HELOC). If they qualify, this allows a buyer to borrow against the equity they have in their old home. Once the house sells, they can pay it back. A bridge loan is another option. It is a short-term loan offered by some banks to cover a downpayment.4. Have a Backup Plan
Buyers and sellers need to have a strategy ready for what they will do if their sale and purchase don’t happen at the same time.
Those who are temporarily without a new address can:
- Negotiate to stay in their old home and pay rent to the buyer. This is usually for just a few days but could be longer if the buyer agrees.
- Arrange to move to a hotel or short-term rental property until they find a new home. They will most likely need to line up a storage site for their things during this time.
- Add a contingency to the contract (more on that below.)
If selling the old house is the issue, decide on one of these options ahead of time:
- Consider how low to drop the price.
- Does it make sense to turn the old home into a rental property and try selling later?
It does not matter which route a person decides to take should they have trouble buying and selling a home at the same time. What is important is that they research their options and put some thought into what they will do before they find themselves in a bind.5. Be Proactive About Projects
If a homeowner is able to find a great new house and find a buyer for their old one at the same time, things are going to move fast. This is especially true in a hot market. It is best not to put off projects, especially on the selling side of the process.
Make sure the home is ready to sell. Anticipate problems that an inspection is likely to uncover and fix them. Better yet, pay to have the home inspected before putting it on the market. Get to work decluttering and staging the home for open houses. A real estate agent can help with all of this, as well as pricing the house right.6. Safeguard With Contingencies
Contracts can include a contingency to lessen the burden on someone buying and selling a home at the same time. The most common is making a purchase contingent on selling the old home. This way, if the homeowner can not find a buyer for their hours, they can pull out the deal to buy their next home.
Another option is to ask for the right to delay the closing date. In most cases closing happens within 30 to 45 days, but getting an extension can buy some time for both sides to get everything in order.
Contingencies typically work best for the buyer in a buyer’s market. In a hot market, other offers might come in that are just as good, if not better. The seller is not obligated to honor a contingency if they do not want to wait.
The Most Important Tip: Get One Great Agent
The best advice when buying and selling a home at the same time is to get a great real estate agent to handle both the sale and the purchase. Unless you are relocating to a different region, this should be easy to do. (Relocating to St. Louis? Berkshire Hathaway HomeServices Select Properties has top-notch relocation specialists.)
Buying and selling at once is a matter of coordination and logistics and an experienced agent can see that it happens smoothly. Select Properties agents help sellers price and prepare their homes to attract competitive bids. At the same time, they are plugged into the local markets to find buyers their next great home.
Deciding to move from one house to another is a big deal, but it does not have to be filled with anxiety. Contact us today to get started.
Cover photo by susafri at Canva.com