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How To Sell Your House And Buy A New One
At The Same Time
Beth Braverman
Things can get complicated when you’re trying to sell your house and buy your next place at the same time. The process of buying and selling simultaneously can be stressful, particularly if you need the money from the sale of your current home to put toward your new one.
In a perfect world, your next house would be ready and waiting as soon as you turn over the keys to your previous one. But of course, the world is not perfect, and the timing between selling one home and buying the next does not always line up the way you want it to. Take heart, though, because a little planning and working with a savvy real estate agent can help make both transactions run more smoothly.
Here are five key topics to consider, with handy tips to manage the process — and keep your sanity intact.
1. Partners: Assemble a team of pros
Given all the steps and paperwork involved in selling and buying a home at the same time, you’ll want seasoned professionals guiding you through the process. Hiring a skilled real estate agent can give you a realistic estimate of home prices in your area and how to price your current home. Using that figure, you can calculate how much equity you have and what your net proceeds will look like, so you can apply that money toward the down payment and closing costs of your new home.
2. Money: Consider your financial position
Ideally, you’d be able to have concurrent closings, selling your home in the morning and closing on your next place that afternoon — or at least within a few days. But what if things don’t go according to plan? You could suddenly find yourself without the necessary funds to close on your new home, or wind up paying two mortgages for an extended period of time. Worst-case scenario, you may be unable to get final approval for a mortgage and potentially lose your next home.
If you don’t have the means to handle two mortgages simultaneously, you might want to include a contingency in your real estate contract that gives you an escape route should the sale of your current home fall through. You may also consider adding a financing contingency, in case your new loan approval hinges on selling your current home. Such contingencies are fairly common, and a good agent will be able to help you negotiate and get them written into the purchase and sales agreement you sign with the seller.
3. Market: Does it favor buyers or sellers?
When trying to buy and sell a home simultaneously, a lot depends on the conditions of your local housing market.
In a seller’s market
In a seller’s market, sellers have the upper hand. This has been the case for most of the past two years, in which the housing scene all around the country was characterized by limited inventory and bidding wars. In the second half of 2022, however, residential real estate markets have begun showing signs of cooling down, with more housing inventory available and sharply increasing mortgage rates putting a damper on sales activity.
Even in a market that favors sellers, you’ll need to make your home market-ready if you want it to bring in top dollar. But this type of market also means you can be more selective about which offers to consider and limit your options to those with fewer contingencies. If the property is priced right and staged well, it will likely sell quickly. So make sure you’re ready to move fast on buying your next place.
In a buyer’s market
On the other hand, when inventory is high and demand is low, that’s a buyer’s market. When buyers are in the driver’s seat, it could take much longer to sell your home. In a buyer’s market, you may want to hold off on making an offer on your next place until you’ve gone into contract with a solid buyer for your current home. You may also want to include a contingency that voids the deal if the sale of your current home doesn’t go through, for peace of mind.
4. Timing: Negotiate the timeline, not just the money
Of course you want to get the best possible price on the sale of your home, and not to overpay for the next one. But consider the timing of the closing process as well when negotiating both deals. The closing date can be one of the most important details when negotiating a sale. The goal is to get both the buyer of your current home and the seller of your next home to agree to adjacent closings or any necessary contingencies. You can even arrange for back-to-back escrow, in which the proceeds from the sale go directly to the purchase of the new property.
5. Safety net: Have a backup plan
No matter how carefully you plan your transactions, surprises can occur. Things might not happen on schedule — or might fall through completely. If you have contingencies in your contract, you should be able to reschedule the closings accordingly or walk away with minimal financial pain.
But it’s smart to have a backup plan just in case. Here are some options:
- If you sell your current home but haven’t found your next place yet, you’ll need to find a short-term rental. Be sure to factor in the added expense of renting a storage unit if all your belongings won’t fit into the temp home.
- Consider asking your buyers to do a rent-back agreement, which would allow you to remain in your current home after closing for a short time and pay rent to the new owners until you can move.
- If you close on your new place without selling the old one first, you’ll have two mortgages to pay. To cover the costs until you’re able to sell, consider a home equity line of credit or a bridge loan over the short-term. (If you do use a bridge loan, keep in mind that you’ll be responsible for making payments on it regardless of whether or when your house sells.)
- If you’ve closed on the new dream house, move in and try renting out your old home and using the income to help offset the expense of the new place until you can sell it.
Should I sell my house now or wait?
Deciding whether it’s the right time to sell your home can be perplexing. That’s especially true if you’re locked into a mortgage rate that’s significantly lower than what’s available now.
There are a number of important factors to consider when it comes to the timing of your house sale. These include:
- Interest rates. Low interest rates entice more prospective buyers to enter the market, which is advantageous for sellers.
- The current housing inventory. A shortage of homes on the market also drives up demand and prices for available homes.
- Whether you would like to downsize. Downsizing may be a more budget-friendly choice than maintaining a larger, costlier home.
- If you need to relocate. If you want or need to move to a new state, selling might be unavoidable.
You should consider these factors carefully, and you definitely shouldn’t rush into a sale just because the market conditions are right. If you don’t have a solid game plan for where you’ll go after your home is sold, or if you fear you could be hit hard by a possible recession, then it may be smarter to hold off for now.
Finding a trusted agent to help
Using the same real estate agent and real estate attorney for both the sale and the new purchase can make the entire process go more smoothly. (An attorney is not required in every state, but even so, it’s smart to have one on your side. Whenever there’s complicated contract language and large sums of money at stake, professional legal advice is invaluable.)
Final word on simultaneously buying and selling a home
Trying to sell your house and find a new place at the same time can be quite a challenge. Working with an experienced real estate agent can help ease the transition and ensure consistent communication with everyone involved. Finally, make sure you keep close tabs on your finances and credit, both before and during the process, and get as much done ahead of time before you start looking and listing. It’s a delicate dance, but the steps can be mastered, letting you successfully conclude both deals simultaneously.
I’m here to guide you through the process, every step of the way. Give me a call at 678-744-8070 and let’s discuss your options. 🙋♀️ – Shay
