How to buy and sell a house at the same time
It is not uncommon to buy and sell a house at the same time, but it comes with many challenges. Here are some tips for navigating the process of purchasing an ideal home while selling your current one and not losing your mind in the meantime.
Simultaneous buying and selling makes both transactions more difficult. If you don’t have a lot of cash on hand, it will be tough to come up with the money for a down payment while you still have equity tied up in your current house. A way out of this situation would be to cash-out refinance on your home, take a home equity line of credit, or sell some of your investments. Some people are permitted to have only one mortgage at a time, so it’s hard to secure a mortgage on another property before selling the first one. Countless details and tough decisions can cause some severe headaches for the homeowners, especially in the case of relocation to different parts of the state. You must be very good with logistics, timing the purchase and the sale perfectly, negotiating on moving dates, and organizing belongings to get ready for the relocation.
If both your buyer and seller are in the same situation as you, trying to buy and sell a house at the same time, it can create more problems since there are more moving parts and more parties involved. That consequently leads to a higher chance for the deal to fall apart. Each of those parties has their real estate agents, inspectors, contractors, etc. You can easily see how any one cog in this massive machine can fail and break up the whole thing.
Purchasing the ideal home
You can’t pass up the chance to buy a home you dreamed of if you found it at the right price. But what if your current home hasn’t sold yet? Maybe you haven’t even listed it yet? First, find out if it’s financially feasible. Look at your cash reserves and your disposable income.
There are many things to consider when looking at an open house, but first, ask yourself the following questions about finances:
- Can I afford to pay both mortgages, and for how long?
- Do I have assets to use as a down payment, and will it be enough?
- How much do I have available for a down payment after paying for both mortgages, for the number of months in the worst-case scenario?
For someone living from paycheck to paycheck, this option isn’t right. For those with a high income and low expenses, it’s probably manageable. Consult with your real estate agent and your lender about these concerns. Sometimes there is a possibility to get a preapproval for the loan before selling your current home.
If paying two mortgages isn’t an option for you, you can make a contingent offer, which includes a condition that you’ll buy only if your current home sells. It eliminates your financial risk, but it also weakens your offer. If the seller has another potential buyer with cash and no contingencies, they will prioritize them. Such a buyer will take precedence over even a higher offer with an inspection, financing, or any other contingency. Consider the markets in your area of buying. If demand is high and supply is low, a contingent offer is not a good option. If it’s a buyer’s market or there is a low demand for the home you want, it may work.
If you have found an ideal home with an attractive price, but you have a bit of competition, try to make the highest offer and come with some non-refundable earnest money as a sign of goodwill and seriousness to completing the transaction.
Once you buy a new home, you can move in and put your old house on sale. If it doesn’t sell soon, you can rent it out until the market improves.
Selling your home the right way
Selling your property before making an offer on another property is another way to go. It’s a financially safer route since you’ll be able to free up your equity and use it for a down payment. You’ll be reducing your debt-to-income ratio, and you will be more likely to get preapproved for the next loan. There are many factors to consider when selling your home. Some are just out of your control, but some you can influence. Try to add value to your home before listing it by doing minor repairs and remodeling. It will improve the appearance and functionality of your house.
Alt tag: Suburban neighborhood houses
Invest some time and effort in staging your home before selling it for a better price. Declutter all rooms and do a deep cleaning. Don’t wait until your potential buyer requests a home inspection; start making necessary repairs and upgrades as soon as possible to help the future sale process and speed it up.
Move some furniture and boxes into storage; it will give you a better opportunity to stage each room for showings. Buyers like open spaces, organized areas, clutter-free rooms, and day-to-day functionality.
Set the right price
In competitive markets with multiple offers, a good real estate agent will be a lifesaver. They are your advantage because of their knowledge of local market conditions and buyer wishlists. They can market your home the right way, help you get the best price, and speed the process up.
Don’t price your home too low and undervalue it, even in a rush. That will result in you having less cash available for your next down payment. On the other hand, pricing the home too high could deter potential buyers, stretching out the process too long. Price your home in line with the market value or slightly below, get multiple offers, and then choose the best one with the fewest contingencies.
Get ready for the relocation
Selling your current home before buying another one means you’ll need to secure temporary housing and relocate two times. It won’t be easy to get the youngest in your family ready once, let alone two times, especially if one of those is a long-distance move. So, start preparing mentally on time. Physically, you’ll manage everything with good planning and organization. Choose a professional moving company to help you with packing and transport. Your loved ones can help by taking care of your young kids while you prepare everything. Keep in mind that long-distance moving requires ample time to organize. Coordinating a relocation when having to buy and sell a house at the same time is hard, so you need all the help you can get.
Live your dream life
To buy and sell a house at the same time is amongst the most stressful processes in modern life. But remember – it’s doable. Many have successfully gone through the same process and now live happily in their dream homes.