HOW TO BUY AND SELL A HOME AT THE SAME TIME
Should you Sell First or Buy First?
Selling a home and buying a new one at the same time can be a complex process. Here is our Roadmap to help smooth out the transition
Buying and Selling a Home at the same time can be compared to performing a synchronized ballet. A lot of moving parts, and a complex process. Pile on top of that, the stress of the uncertainty.
Is it possible to survive Buying and Selling a Home at the same time? The short answer is, yes, if you lay the groundwork for success. There’s a lot of prep work involved, so start getting ready as soon as you can. The more you plan, the less mistakes you’ll make and the more in control you’ll feel.
GET READY TO SELL
An experienced Real Estate Professional, will provide guidance on the process. Using their local market knowledge, they will show you how to price your home for the market to maximize what you can ask and expect to receive. And the time you can expect it to take to get your home sold. They’ll be able to give you valuable input on how to prepare your home to sell. They’ll be able to guide you where your investment to get ready is best spent. Timing will be an important part of this equation.
GET READY TO BUY
To get an offer accepted you’ll either need the cash to buy your next home outright or you’ll need to be fully pre-approved for a mortgage on the home you want to buy.
First, make sure your finances are in order. Lending guidelines are changing every day, understand what your options are with your Lender and the costs.
MAKING IT WORK
When selling your home, you likely need to use the proceeds to pay off your current mortgage and then apply any remaining money toward your next home. BUT until that sale closes you need a way to bridge the gap. Fortunately, you have options.
TIME IT RIGHT
Are you in a Sellers’ market or a Buyers’ market? Knowing this will help you lay out your best strategy going forward.
In a Sellers’ Market – homes are selling quickly and they’re selling at, or close to the asking price. In a hot market, seller’s might be reluctant to accept a Contingent on Sale offer due to the risk. For instance, if your current home does not close, your purchase might be cancelled and the seller has potentially lost two sales; your purchase, and the sale to another qualified buyer while their home was off the market waiting for your home to close.
In a Buyer’s Market – Homes are taking longer to sell and they’re selling at a discount off the asking price. In this scenario, you’ll want to have your current home under contract, then go shopping for your new home. In a slower market, sellers may be more open to a Contingent on Sale offer.
The CA purchase contract has contingency periods built in, you can delay the start of your contingency period until after your homes closes, or if the seller doesn’t want to wait that long, you’ll want to correlate the timelines between the two contracts. Timing the removal of contingencies on your new home after the buyer for your current home has removed their contingencies. By doing this, you add a layer of protection in the event your current home sale doesn’t close.
SELL BEFORE YOU BUY
Probably the least stressful way to go is to sell your existing home now and get the cash in your pocket. In this scenario, you know exactly how much equity you have available to spend, but there’s a gap between when you sell your existing home and when you can move into your new home.
One way to work around this gap is to negotiate a “rent-back” with your Buyer up front. That means you rent your home back from the new owner for a period of a week or maybe 30 – 60 days, This will allow you to stay in your current home until you can move in to the new, so you move only once. During the rent-back period you can confidently go shopping for your new home, you don’t need to make a Contingent on Sale offer and you have time to get your new home closed, then make the move without stress.
SHORT TERM RENTAL
In the event the new owner doesn’t want to give you a rent back; temporary housing at an Extended Stay Hotel until you can close on your new home can be a good solution.
BUY BEFORE YOU SELL
CONTINGENT ON SALE– This means, your offer to purchase a new home is contingent on the sale of your current home closing. This is a tool that can help you feel more confident that you’re protected as you sell your existing home and buy your new home.
If you’re confident your home will sell quickly, you may be able to negotiate an extended closing on your new home purchase. In this scenario, you’ll want to extend the contingency period on your purchase contract.
A bridge loan is a short-term loan to cover your down payment until your existing home sale closes. These loans can be hard to qualify for and have higher interest rates with points. You must qualify for all three loans, your existing mortgage, the Bridge Loan, and the new mortgage along with property taxes, etc. If the sale and purchase homes are in two different states, that adds another layer of complexity.
Buying and Selling a home at the same time can be flat out nerve-racking. Navigating the process has pit-falls that you’ll want to understand. Having a skilled professional on your side will be important for the successful sale and purchase and we have a roadmap that will help smooth your path.
If you own a home in the Desert and would really like to move, but feel it’s too difficult because you need to sell your home to buy a home, we’re here to help with the process. Give us a call today to find out how we can create a soft landing between the sale and the purchase of your new home.