Tips for Buying and Selling a House at the Same Time
Many of you have probably embarked of the balancing act of buying and selling a home at the same time, but if you haven’t (or even if you have) this can be an overwhelming and tedious process. Should you list your house first? Should you put an offer on a home before yours is sold? What should you do about the closing costs? It’s totally normal to have a lot of questions.
So, whether this is your first time to buy and sell at the same time, or you’ve done it before and are looking for tips, hopefully, this article will be helpful for you.
The Safe Option: Buy Before You Sell
I like to call the route of buying before you sell the safe option because you are guaranteed to have a home at any given moment. But, the catch is you may end up with 2 homes at the same time which can mean 2 mortgages. It also may be harder to get approved for a loan if you don’t have the money to cover the mortgages of both homes for 6 months in your savings account. If thinking of the financial implications of that makes your insides turn upside down, this may not be the option for you.
However, if you do choose to go this route, there are few things that you can try (or we can try together if you choose to use a realtor).
Include a Home Sale Contingency: To put it simply, this contingency allows you a set period of time to find a buyer for your old house before you move forward with your new home. While this may sound great to you, it typically doesn’t sound great to the people selling. Because of this, your offer may seem weaker than someone else’s without this.
Bridger Loans: If you are worried about making 2 mortgage payments, you can get what is called a bridger loan. This is a short term loan that lets you pay the mortgage on your current home, and then when your home sells you use the profit to pay off the loan.
Request an Extended Closing: A standard closing is 30-45 days, but if you are buying before you sell, you could request an extended closing. This will hopefully give you more time to sell your current home.
The Financially Secure Option: Sell Before You Buy
For most people, this option is more appealing when it comes to finances. However, there are a lot of pieces at play that have to fall into place if you are going to sell and move directly into your new home. In this option, oftentimes people end up having to find temporary living places or invest in storage sheds if they can’t close on a home at the same time their current home sells. This may mean multiple moves for you.
Here are a few things that you can choose to try if you sell before buying.
Prioritize Settlement and Closing Dates in Your Contracts: If moving from your current house to your new house on the same day is important, you can prioritize dates in your contracts. Remember, these are often negotiations so you may have to give a little in other areas to find an agreement with your buyers and sellers.
Include a Rent-Back Contingency: Again, this doesn’t always work, but you can try to include a contingency that lets you rent your current home from the new owner until you close on your new home.
Find a Month-to-Month Rental Home: To help take some pressure off of finding another home to buy immediately, you could find a rental home that offers month-to-month rental options. This will ensure that you aren’t left without somewhere to live.
No matter which option you choose, just know that there are pros and cons. It can be a tricky business, and I always recommend utilizing a realtor to help you navigate the rough waters. You don’t have to do this alone!
Next Steps:
I’ve worked with numerous clients who are trying to both buy and sell, and I’d love to help you too. Please don’t hesitate to reach out with any questions you have at traceyrice@kw.com or 405-226-3770.