Buying a home and selling a home at the same time is more complicated than just buying a new property. Homeowners who are ready to sell their current homes while buying a new one should be prepared to face the process's unique challenges.
Here are a few key tips and strategies for balancing the process and cultivating a successful purchase and sale.
1. Build a Strong Real Estate Team
Building a strong support system of great real estate professionals is the best way to streamline buying and selling a home at the same time. Finding a top-performing real estate agent in your market and working with an experienced lender ready to accommodate your needs will help you navigate both transactions.
Your agent will serve as your primary guide during the selling and buying processes. When you are looking for the right representative to work with, explain your situation and needs while you’re interviewing potential agents. Look for someone that has experience in helping clients sell and purchase homes at the same time. You also want someone who knows the markets you will be working in.
Similarly, always share your goals and circumstances with potential lenders as you’re shopping for your mortgage. You’ll want a lender who is ready to accommodate your needs, such as a tight closing schedule or access to special loan types.
Think About the Long-Term
Since selling your old home and buying a new one will take some time, be sure that you’re hiring the right agent for you. You’ll be working closely alongside this person so it’s important that you choose an agent with who you get along with, trust, and can communicate easily.
2. Analyze the Current Market
If you’re planning on just purchasing or just selling a home, you’re going to be looking at your local market’s current trends. It only makes sense that you’ll want to pay even closer attention to the market conditions in your area if you’re planning to sell and buy a home at the same time.
The market’s activity at the time you list your home for sale and start shopping for a new one will play a large role in shaping your experience. As a seller and buyer, you will need to be looking at both the market you’re going to be selling in and the target market you’ll be buying in.
Your real estate agent will help you consider how timing will impact your position as a buyer or seller and form a strategy accordingly. Knowing if the markets you will be working in are favoring sellers or buyers will help you leverage your positions.
Always Have a Plan for Potential Setbacks
Since buying and selling at the same time creates strict deadlines, be prepared for any interruptions or potential setbacks. A stall in one part of the transaction may slow down the deal, so always have a plan set in place for any issues between the two deals.
3. Know Your Own Financial Situation
Knowing your finances will help you create a comfortable and balanced plan for both selling and buying a home.
As a seller, you’ll need to understand how much your home’s current market value is, how much equity you’ve built up, and the fees you’ll need to deduct from your earnings. As a buyer, you’ll need to consider how the profits from your sale can fund your purchase, whether or not you need additional financing, and covering the costs of the move.
Working with a financial professional, such as a planner or accountant, will help you crunch the numbers as you’re setting your budgets. Consult your agent and lender about what your financial options are based on your situation. Remember to think about the upfront costs of selling and buying like funding home repairs and paying for additional inspections.
Have a Budget for the Hidden Costs of Buying and Selling
Both selling and buying a home invite additional costs that may come unexpectedly to sellers and buyers. For example, a few of the hidden costs of buying a home include earnest money and property taxes while staging and individual appraisals are some of the hidden costs of selling.
Always have funds available for additional expenses that may arise throughout both transactions. This should be separate from the basic costs of buying and selling such as the down payment and closing fees.
3 Ways to Buy Before You Sell
Instead of trying to sell and buy a home at the same time, some buyers may choose to purchase their new home while they still own their current home and then list it on the market. If you buy before selling, you’ll have a new home to move into immediately and you won’t be so pressed on time while trying to close on your new home.
These are three ways that homeowners can purchase a second home before selling their old home.
1. Rent Out Your Old Home
Renting out your first home will allow you to collect rental income that can help cover some of the expenses from your real estate transactions. This will also allow you to take time selling your home since you won’t be in as much of a rush.
2. Use an Extending Closing
Extended closings happen when buyers push their closing timelines beyond the usual 40 to 45 days. Extending your closing for your new home can help you sell your old home while you’re in the escrow process with your next one. This will be added as a contingency to your new home purchase.
3. Seek a Bridge Loan
Certain banks offer bridge loans, which are short-term loans that can help you cover your down payment and other buying expenses. Talk to your bank about bridge loan options to learn more about the specific details as they would apply to your situation.
2 Ways to Sell Before You Buy
Instead of buying before selling, some homeowners also choose to sell their current homes before buying their new ones. This introduces the benefits of being able to transfer the equity from your old home into your new purchase and focusing all of your attention on achieving a successful and profitable sale.
If you plan to sell your current home before buying your new one, here are two ways you can make it happen.
1. Move Into a Short-Term Rental
If you’re able to find a short-term rental solution, you won’t have to worry about where you’ll stay after you’ve sold your home. You’ll also have a place to store all of your belongings while you search the market for a new home.
Whether you choose to look for a short-term lease on a single-family home or a short-term rental opportunity in a condominium, you’ll have the time to find your new home comfortably.
2. Use a Rent-Back Agreement
A rent-back agreement is a clause in your purchasing agreement that allows you to continue living in the home after you’ve sold it by renting it out from the new owners. There will be a set period and price agreed upon in the transaction agreement.
This option gives you more time to shop for your new home while you have access to the profits from the sale. Rent-back clauses also prevent you from having to move all of your belongings two times as you would if you moved into a short-term rental.
If you’re ready to list your home for sale or browse through available homes for sale all over the country, visit our listing portal today.