While it may seem easy and straightforward to sell your home and buy a new one at the same time, this process is more complicated than meets the eye. Here’s what you need to know about this process to help it go as smooth as possible:
Is Selling and Buying a Home at the Same Time a Good Idea?
Many people shudder at the idea of selling and buying a home at the same time. So is it really a good idea? Here are some pros and cons that you should consider before making a decision.
Pros
- Selling a house and buying a new one simultaneously is undoubtedly the most convenient option because you don’t have to worry about temporary accommodations, whether it’s staying with family, staying at a hotel, or renting out a space.
- On the other hand, you won’t worry about renting out your existing home and either becoming a landlord or hiring a property management company to work with.
- In most cases, there are contingencies in place that prevent you from getting stuck with two houses simultaneously, so the process isn’t as risky as it might seem.
Cons
- The logistics of selling and buying a home at the same time can be extremely challenging. Sometimes, no matter how much planning and consideration you put into the entire process, something comes up and ruins the timing. This can easily leave you without a place to live for some time.
- The finances of selling and buying a home simultaneously can also be difficult. This is because most people won’t have enough cash on hand to cover the down payment on their new home before they have sold their current home. Loan restrictions and requirements can also make it difficult for people to pull off two simultaneous real estate transactions.
- Finally, the competitive nature of the current real estate market can make buying and selling at the same time seem nearly impossible. This is because cash buyers with no contingencies are coming in with extremely competitive offers. On the other hand, buying and selling a home at the same time often comes with settlement or sale contingencies that are less attractive to sellers with multiple strong offers.
How To Go About Selling and Buying a Home at the Same Time?
When it comes to selling and buying a home simultaneously, there are two different routes to choose from: buying and then selling or selling and then buying. Here’s what you need to know about these different options to make the best decision for your situation.
Option 1: Buying Before Selling
You can choose to buy a new home before you sell yours. In this scenario, you will find a new home and make an offer before you put your existing home on the market. When you make your offer, however, you need to include a sale and settlement contingency. This contingency states that the sale of the new home is contingent on you selling your existing home and helps make sure that you don’t end up with two houses.
Option 2: Selling Before Buying
You can also choose to sell your existing home before buying a new one. In this scenario, you will list your home and accept an offer before looking for a new home. From there, you will usually need to find temporary accommodations to take your time and find a house that you love and want to buy. If you end up finding that perfect property before closing on your existing home, you will also need to include a settlement contingency with your offer.
6 Tips to Ensure a Smooth Buying and Selling Process
No matter which option you choose, buying and selling a house simultaneously can be challenging without the proper approach. The good news is that with the right approach and these helpful tips, you can quickly sell your home and move into your new one in no time.
Tip 1: Know the Market
Before you decide to sell your existing home and buy a new one, you need to take a look at your local real estate market. The market will either be a buyer’s or a seller’s market — but it won’t be both. Since you’re doing both, how can you best take advantage of the conditions you’re working with?
Odds are that you’re going to be working with a seller’s market in most places in the United States. This means that there are more buyers than there are houses on the market. And while this may make it easy for you to sell your existing house, you’re still going to have to compete to buy a new house.
Tip 2: Choose the Right Real Estate Agent
To compete to buy a new house, you’re going to need to work with an experienced real estate agent or brokerage. If the agent you worked with to buy your current home is still available, it may make sense to work with them since you already have an established relationship. On the other hand, if you’re looking for a new real estate agent, referrals from family and friends are the best place to start.
Once you have a list of potential contenders, do your research and make sure that they have enough experience and are familiar with the area. You should also meet with them to make sure that you have the right chemistry. From there, you can start talking about strategy so that you can start looking at potential homes.
Tip 3: Secure Financing
Most people can’t buy a home without financing, so this is one logistic that you need to have figured out before you move forward in the process. Again, if you like your current lender and have a good relationship with them, you may want to approach them about securing a new loan for the home you buy.
It’s always a good idea to shop around with multiple lenders to ensure that you’re getting the best rate. No matter how much you may like your current lender, if another lender can offer you a lower interest rate, then your choice should be obvious. Just make sure that your lender is trustworthy, knowledgeable, and communicative so that you can quickly close on your new home without a hitch.
Tip 4: Make a Competitive Offer
Once you have found the right home thanks to your agent and have been pre-approved by your lender, it’s time to make a competitive offer — keeping in mind that you’re dealing with a seller’s market. Many sellers are receiving cash offers for their homes, so it can be hard to compete with traditional financing.
One way to better compete in such a hot market is to use a bridge loan that allows you to close quickly and easily on investment properties. You can also work with a realtor to make a competitive offer that’s higher than the asking price so long as you’re prepared to cover any appraisal gaps.
Tip 5: Come to an Agreement
After you have made an offer, be prepared to negotiate a little bit. For instance, are there any contingencies included with your offer? If you’re selling and buying simultaneously, a common contingency requires that your existing home must sell before you can close on your new one.
This settlement contingency works well in a seller’s market since you can generally expect to sell your existing home fairly easily. Many sellers are getting offers with no contingencies, so this is something to keep in mind when submitting your offer and negotiating with the seller.
Tip 6: Close and Move Forward
Finally, it’s time to close on both your current home and your new home! It can be hard to get the timing right when it comes to closing. After all, you don’t want to be stuck without a home for any period of time. This is why you should always try to have a little bit of overlap when it comes to closing on your new home and closing on your current home so that you have plenty of time to move everything and get settled in.
Final Thoughts on Selling and Buying a Home at the Same Time
Now is a great time to sell your home and take advantage of the seller’s market. At the same time, you will likely need to purchase a new home to live in unless you’re a fan of renting. Make the buying process as easy as possible with lenders like Vaster.
Sources:
Finding the Best Real Estate Agent | Bankrate
Buying and Selling a House at the Same Time: Where to Begin | Zillow
How to Find the Right Real Estate Agent for You | NerdWallet
How to Buy a Home in an Extreme Seller’s Market (That’s Occurring During a Pandemic) | Forbes
10 Things You Should Know About working With a Realtor | DwellingWell.com
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