How to Buy and Sell a Home at the Same Time - You CAN Do It!
Whether Downsizing, Upsizing or "Luxurizing" (our term for moving to a home lateral in size with significantly more features and amenities) buying a new home should be an exciting experience!
Unfortunately, the excitement is quickly lost for home buyers who need to sell a home at the same time.
For most people, just the thought of Buying and Selling at the same time evokes an endless amount of menacing questions.
- “Where do I begin? Buy first? Sell first?”
- “How long will the process take?"
- “Is now a good time?"
- “Is it worth it?
The unfamiliar process and lack of clarity surrounding the process can be overwhelming and for some, paralyzing.
I recently helped a young family buy and sell. The parents, both successful professionals working full-time while raising 3 young kids, barely had enough time to breathe let alone buy and sell a home at the same time. They'd been eager to move to a bigger house for years, but they didn't know where to begin and they were too exhausted to figure it out.
With kids that never stop fighting sharing a room, they finally had enough. They came to me absolutely fed up with their current living situation, desperate for more living space and hopefully, peace. Within minutes of our initial meeting they were motivated to get moving, free of the negative emotions paralyzing them for years.
Much happier in their new home, they were shocked how easy the process actually turned out to be. They made it through Buying and Selling at the Same Time with very little hassle and their only regret is that they put off moving for so long.
Inspired by the young family and the many others pushing off their happiness, I decided to fill the information gap online.
My guide to buying a Home and selling a Home at the same time breaks the process down into 4 simple steps so easy to follow you'll be ready to get started today!
Step 1- Get the facts and assemble your team
When it comes to real estate, your success is dependent on current market statistics. This is especially true during the extremely sensitive process of Buying and Selling a Home at The Same Time. The first part of Step 1 is to collect all of the current local Real Estate market statistics you possibly can, like a little kid on an Easter Egg hunt , it's time to get serious!
But before you reach for your smartphone and dazzle out an array of apps claiming to be the lost keeper of Real Estate secrets, I am going to break some bad news. The truth is that there isn’t an algorithm in the world capable of producing the up-to- date , accurate, hyper-local market statistics you need. For that, you need a local real estate professional, not a computer.
Your Realtor will be your most important source of information throughout your real estate transactions. Ultimately, providing you with the critical statistics you need, helping you to interpret data and select the buying and selling strategy that aligns with these market conditions best.
It's time to select your first team member and hire a Realtor.
Unless you plan to purchase your new home with cash Part 2 is to sit down with a mortgage lender. You'll want an overview of the market and current interest rates and interest rate predictions.
Tell your lender about your plans to buy a new home. After reviewing your finances your lender will present you with the financing options available to you.
The most important information to take from this meeting is whether or not you absolutely must use the equity from the sale of your current home to purchase your new house.
Couple this with the current prevailing real estate trends in the market and estimated timeline presented by your Realtor, you have enough data to select your buying and selling strategy.
Step 2 - Select your Buying and Selling Strategy
There are the 3 strategies to selling a house while buying a house :
Strategy 1 - Buying and Selling Simultaneously
Home buyers reliant on the funds from the sale of their home to purchase their new house commonly choose this strategy. In a balanced real estate market, not heavily weighted to either buyer's or seller's this strategy should be fairly simple.
Based on the current real estate market statistics, your Realtor will be able to predict how long it will take you to sell your current home and how long it may take you to locate a new home. Hopefully, the timelines line up if your goal is to close both of your escrows on the same day, while consecutive closings are wonderful, they are extremely rare too.
Your two separate escrows will involve many different parties and variables, relying on everything to fall into place perfectly should not be your only plan.
If it will take you longer to sell than buy and you've already located a home you'd like to purchase , consider the following: Negotiate a longer escrow with the seller of the home you're buying giving you more time to sell your home or make an offer to buy contingent on the sale of your current home.
If it's taking longer to get into contract on a replacement home than it is to sell, consider the following: located temporary housing, negotiate a longer escrow to accommodate, negotiate a seller rent back following the close of escrow, or sell your home contingent upon locating a suitable replacement property.
*Tip* Consider Utilizing Contingent Contracts
In most Real Estate Markets, contingencies weaken your purchase offer and hurt your chances of getting top dollar when selling. Discuss the plausibility and potential consequences of Buying or Selling Contingent in your market with your Realtor to determine if it hampers your situation or offers a favorable solution.
Strategy 2 - Buy first, Sell Second
There's no denying the casual pace of buying first is a major perk. It allows you to take your time searching for your new home. You'll also be able to take your time preparing your home for sale and have less pressure to sell quickly.
Perfect for cash buyers, it’s not as straightforward for mortgage loan borrowers. Borrowers should consider the possible financial implications of carrying two mortgage loans before selecting this strategy.
The consequences could be drastic if you fail to keep up, but in the best case scenario your home will sell quickly and you won’t carry the burden for long. In a slow Seller's Market consider renting your home temporarily to lift the burden.
If you're desperately hoping to buy before selling but you're unable to qualify to carry two mortgages meet with your Lender to explore Creative Financing opportunities, if any. Creative Financing is a long shot but it doesn't hurt to ask if you qualify for a temporary Bridge Loan or can take out a temporary Home Equity Line of Credit to bridge the gap and buy first.
After ruling out Creative Financing your last shot at Buying before Selling is to borrow funds from friends, family or your 401K .
Strategy 3 - Sell first, Buy Second
To qualify for a mortgage loan and buy a new home many people need to sell first. Financially, Selling first is the “safe bet” since it guarantees you won’t end up paying two mortgages.
However, the “safe bet” comes with its own concerns. The first being you may need to locate temporary housing between the close of your two escrows.
Hopefully, you can shack up with friends or family before spending the night on the street, also consider finding a temporary rental.
In a seller’s market, you may be able to leverage your upper hand and negotiate to rent back your home until the escrow on your new home is closed.
A second common concern is selling without being able to locate a replacement property. Again, have temporary housing lined up so you won't feel forced into settling on a home to meet a strict timeline.
*Tip* Negotiate an extended escrow with the buyer of your home giving you more time and less pressure while you house hunt.
Step 3 - Back-up Plan
As they say, Expect the best but plan for the worst!
The reality of buying and selling is your perfect plan could work out beautifully at first only to burst into flames halfway through the escrow process.
Plan for the following:
Where will you go if you have to find temporary housing?
Who can you borrow money from in a pinch?
Step 4 - Get Moving!
Hopefully, you're feeling Empowered and have a much better understanding of the Buying and Selling process , the different strategies, and how to get started selecting the perfect strategy for your move.
Hire a Realtor, gather current, local Real Estate Market statistics and ask them to give you the market value of your home. Meet with a Lender to determine your financial capabilities, Together - with your team of Professionals review and interpret the information to select the right buying and selling strategy, Have backup plans in place and you're ready to get moving!
It's time to dominate Buying and Selling at the Same Time, Here's Exactly Where To Start....