Buying and selling a home at the same time can be complex. You have to accept that you can’t control everything that happens during this process as many factors come into play. However, you shouldn’t be scared because it is definitely doable. It is in fact quite common to buy and sell a home at the same time. But it is important to note that the process involves planning and consultation.
Prep Your House for Listing
Before you list your home in the market, you have to prepare it for selling. You don’t expect to sell a home that doesn’t look its best, right? You should start by having a home inspector come to your home. A pre-inspection gives you a head start on identifying what needs to be updated. It can also be a powerful negotiating tool because you know the exact status of your home. You might think of skipping this step, but I assure you that you don’t want to wait until the last minute.
Be sure to declutter the inspection access points. Your stove, oven, and furnace filters must be clean. Keep your closet and attic spaces organized. You should also test the functionality of the items in your house. Your light switches, toilet flush, and window locks are only some of the things you need to check. Also, take basic safety precautions. Change the batteries of your smoke detectors and replenish your fire extinguishers. If you have broken bulbs, missing roofing, or torn screens, now would be a good time to have them repaired.
It also helps to have your house professionally cleaned and staged. Once all amenities are updated, a beautifully designed home can get your home under contract faster, which will help you find your new home faster as well. The addition of a few art pieces and proper furniture will help set your home apart from other houses on the market. Ensure that everything photographs well so future buyers can have a clear image of what their next home looks like.
Sell First, Buy Next? Or Buy First, Sell Next?
You may consider selling your home first before buying a new home. This option will give you a clear picture of the equity you can put toward your new home. This move is considered less stressful because money is one of the key players in this process. Things will seem to fall in their proper order because you can let go of an old property before moving to a new one.
However, you might end up having the trouble of moving twice. That’s because you might have not closed on a new home yet. You may consider renting a storage space to stash your belongings while you stay at a hotel. You can also use your connections to look for friends with available short-term rentals. This will help you avoid being stuck in a rigid lease, especially since you might spend only about 30-60 days in a temporary home. If you do have a lot of things to move, this might set you back.
You can go the other way around and buy first before selling. Since you are not under the pressure of closing out your current home, shopping comes with ease. This allows you the flexibility to look at as many homes as you want without having the feeling of a deadline approaching. You will have plenty of time to purchase a house that you’ve carefully examined and truly like. Moving will also be a breeze because you can just transfer your belongings directly from one house to the next. Not only that, but it’s nice to know that you have a cushion if ever the deal you’re looking at falls through. At the end of the day, you always have your current house to go home to.
Although, it is important to note that this advantage can very well turn into the opposite. If you need the money from your current home to purchase your new home, this option won’t work. Additionally, you’ll have to qualify for both mortgage payments which can be difficult for many people to do. You risk lowering the price of your property in order to move.
Buying and Selling Simultaneously
But how do you actually buy and sell simultaneously? Typically, you put your home under contract, and then put your new home under contract. You close both transactions on the same day, coordinating closing with the other parties, experienced mortgage lenders, and the title company. It is important to keep in mind that you are not the only one involved in the equation. It requires excellent timing, and maybe even a little luck. Even so, you’ll be happy to know that selling and buying simultaneously happens all the time.
Communicate for Success
Proper communication and a well laid out strategy across all parties involved allow for a smooth transition between both properties. You have to allot enough time for both closings. This includes an allowance for unexpected delays such as weather issues, title issues, and busy appraisers. It would also help to involve fewer parties as possible for better communication. It’s a no brainer to only want to work with experts but working with experienced mortgage lenders and real estate agents especially come in handy if you want to close deals simultaneously. In double closings, issues are bound to come up. It’s important to have an expert opinion to improve your chances of success.
Mortgage Payments Old and New
When buying and selling simultaneously, your old mortgage isn’t counted against your debt to income and you can use the equity in your old home toward your new home purchase. Sometimes, extending the closing of your old home from the typical 30 days to 45 or even 60 days is enough.
Stay in Place Longer
You can also rely on contingencies when selling or buying. One option is to go for a rent-back contingency. Once you’ve sold your home, you can ask to rent your old house from the new owners for 30-90 days. You’ll have the equity to put on your next purchase, and this will buy you a good amount of time to shop for your new home. It sounds like a weird proposition, but a lot of homebuyers tend to agree to this. After all, you still call the shots being a seller in this market. You’re looking at a high chance of approval because multiple shoppers are making offers on your property. Buyers are willing to wait just a little more time to move as long as their deal is the one you accept.
You can also opt for buying with a contingency to sell. This sounds ideal for you because you can close out a deal only if you sell your current home. Although in reality, this option sets you back in a long list of eager buyers. It weakens your offer, and sellers are less interested in dealing with this option due to uncertainty. You don’t call the shots anymore because it’s a seller’s market. If you’re competing with a buyer without any contingencies, you are not likely to be granted an offer. The seller might even rule you out of the prospects completely. But all hope is not lost, the chances are just very slim.
Take the Final Steps
Now comes the time to take the plunge. Because your home is all prepped and you have options on which route to take, you need to implement your selling and buying strategy. Start with narrowing down the home you want. You’ve probably seen the properties you like, so set the specific preferences you are looking for. It also helps to decide on a specific area where you want to buy your home. Sit down with your Realtor® to figure out exactly what it is you’re looking for.
Next, list your home on the market. You are only a few steps away from moving to your new home. It would help to think that your current home doesn’t belong to you anymore. You have loved it well and you’re ready to take the next step. With the help of your most trusted agent, a deal on your home will be closed out in no time.
You can do this! Just remember to always assume risks and be prepared to overcome them. This can be a complex process so be sure to approach it with well-thought-out plans. Sometimes, things really don’t go exactly as planned no matter how detailed your preparation is. But don’t stress out too much and don’t let that discourage you!