How to buy and sell a house at the same time
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Buying or selling a home can be a monumental task. Doing both at the same time takes complexity to a whole new level.
If you are buying and selling a home at the same time, you will need to navigate a vibrant seller’s market as a seller and a buyer. You will benefit from a share of a sellers market, but you might face challenges as a buyer as well.
With fewer homes for sale than there are buyers, there is more urgency and competition in the market. However, there are signs that the housing market is starting to cool.
There’s no way to make the process of buying or selling a home completely predictable, but thinking about your preferred strategy will help you navigate the ups and downs a little easier.
While you can’t control the market, you can plan ahead to minimize the impact of any potential challenges that might arise.
Here are some expert tips to answer some of the questions that might arise when buying and selling your home at the same time.
Tips for buying and selling at the same time
When buying a new home and selling an old one at the same time, a transaction always comes first. Sometimes this happens first because of personal preference, while other times it is about finding the perfect home before you are ready to sell. With such a dynamic market, each of these moves should be carefully considered and a qualified real estate agent can help you strategize based on local market conditions.
Whichever route you choose, these expert tips can help you make a successful transaction and minimize the stress of buying and selling at the same time.
Buy a house before you sell
While some buyers are able to buy a new home without waiting to sell their current home, many do not have this luxury.
For people who need the proceeds of a sale to move forward with an offer on a new home, this is where an offer contingency comes in. This essentially means that the buyer has a set amount of time to sell their current home to help finance the new home. purchase. While “contingent offers aren’t that strong,” there are always ways to help, says Shelby osborne, CEO of Five Pillars Team at eXp Realty in Charlotte, North Carolina.
For homebuyers planning to make a conditional offer, consider the following:
- Request an extended shutdown. While most buyers want to move into their new home right away, you still need some time to sell yours. As part of your offer to purchase, request a 60-day extended close to allow more time to find a buyer.
- Have your current home ready to go to market. By prepping your home for listing (fresh paint on the walls, decluttering, and spacious staging), you’ll be ready to advertise and attract a buyer as soon as you get your new home under contract. Osborne recommends “talking to your agent about how to prepare your house for sale”.
- Make an offer conditional on the sale of your current home. Having this contingency in your purchase agreement allows you to opt out of the purchase if you are unable to sell your home. This possibility allows you to cancel the purchase without any legal consequences and may prevent you from losing your deposit.
- Make an offer with a home inspection Where evaluation possibility. Contingencies are clauses intended to protect the buyer and seller to formally signal their interest assuming certain conditions can be met.
- Using a HELOC to finance your deposit. Homeowners with an established HELOC can use their lines of credit to finance the down payment on a new home. When the home sells, the HELOC balance is refunded from the sale proceeds. Just make sure you can afford the extra monthly bill that comes with borrowing that money.
Benefits of buying first
- Ability to take your time to find the right home
- Ensures you have a new home to move into when your old home sells
- Only pay moving costs once
Cons of buying first
- You may need to make two mortgage payments at a time if your old home doesn’t sell
- More difficult to qualify for the new loan while making payments on the old mortgage
- Financial constraints can cause you to accept a lower offer on your home
Sell a house before you buy
In some cases, it will be a good idea to sell your home before you think about your next move. “Some sellers sell and move into rental property or rent to the buyer” to make a profit and cash in on their equity before deciding on their next move, says David lee, group owner David Lee with Keller Williams in Yorba Linda, California. Some sellers wait for lower prices before buying again. Others are considering moving to a lower cost area.
If you are considering selling your home before buying a new one, keep these tips in mind:
- Request a sale-leaseback to give extra time. A sale-leaseback allows sellers to “rent” their home for up to 60 days after selling it. Lee says a sale-leaseback “gives sellers more time to locate a property or if something is delaying the purchase.”
- Place personal items in a storage unit. Sellers should declutter their home before taking pictures and listing their property. Storage units can hold additional personal items if they have to live temporarily in one location until they find new housing.
- Buyers without unforeseen events make stronger offers. If you don’t have to sell your home first when making an offer for a new home, one seller will consider your offer stronger than others. When you first sell your home, you know exactly how much your down payment will be, which can also strengthen your offer.
Benefits of selling first
- Prevents two mortgage payments while waiting for the sale of your old home
- Easier to qualify for the new mortgage without the existing mortgage payment on your credit report
Disadvantages of selling first
- Could get you stuck without a home for an extended period of time
- Additional storage and moving costs for all your items
- Home values may continue to rise before you can get an offer accepted
- Interest rates can go up before fixing a rate
Why knowing your market is important
Knowing what type of market you are in can help you set the right expectations before shopping for a home or putting your property up for sale. Here are some characteristics and trends to help you understand what type of market you are in and what that means to you:
Characteristics of a buyer’s market
- The buyer is more likely to negotiate the price
- Sellers are generally more willing to lower their sale price, approve requested repairs, and agree to other terms favorable to the buyer.
- Houses stay on the market longer
- You will see list price drops
- There isn’t a noticeable influx of people lining up to check out each Saturday morning open house
Characteristics of a seller’s market
- Seller can ignore offers below list price
- Buyers will need a higher purchase price and a larger down payment to make their offer more competitive
- Buyers can get creative with their offers, for example by sharing a personalized letter to make an emotional appeal to sellers
- Buyers are more likely to overbid or exceed their purchase budget
- Buyers could be paying too much for a home in need of major work or upgrades
- The buyer is more likely to eliminate the unexpected
Be aware that eliminating contingencies reduces the possibility of opting out of the transaction if something bad happens. For example, removing a home inspection contingency could mean you aren’t aware of expensive repairs until you’ve purchased the property.