Sell Your House and Buy One at the Same Time: Some Tips for Success
Maybe you have to move for a new job, or maybe your family is just growing out of your house – whatever the reason, it’s time for a new house. But you can’t come up with the down payment until you sell your house, and if you sell your house before you have a new one, you won’t have a place to live. So what do you do?
Selling one house and buying another at the same time can be a tricky process, and there are a lot of external factors that can influence it. Working with an experienced real estate agent will make the process a little easier, and you’ll get tailored advice for your situation. Here are a few tips for you:
Assess the Market First
Before you can develop the right strategy for your buy-sell plan, you need to know what the market is like. Is it a buyer’s market? If that’s the case, you may have a harder time selling your home quickly. You may need to make a lot of improvements to your home, and you may need to prepare yourself for a lengthy closing that requires additional negotiation after things are discovered in the inspection. If it’s a seller’s market, you may also need to lower the price of your home, or you may need to prepare yourself to have your home on the market longer – and to pay two mortgages for longer.
If it’s a seller’s market, you may be able to sell your home quickly, but you may not find a house you want to buy quickly. Widen your search to give yourself more options so that you can find a new home quickly. Otherwise, look into rental options so you know what’s available should you need it.
Plan the Timing but be Ready to Make Changes
You need to understand what challenges you might be facing if you buy first or sell first. If you sell your home first, you may not have a place to live while you are looking for a new home. You may have to rent a house for a short term, which might cost more and which would require you moving your things twice. However, it will also be easier to get a mortgage for your new home because you won’t have another mortgage weighing you down and skewing your debt-to-income ratio. Selling first also clears up money that you can use for a down payment on a new home & for the short term rental.
If you buy a home first, you’ll have to pay that double mortgage, but you also won’t have to worry about where your family is going to live. You’ll also need an alternative means of coming up with the down payment.
It is important to talk through these and other issues as trhings do not always go according to plan. Buyers may lose their financing, sellers may change their minds, inspections may turn up problems with houses – make sure you have a contingency plan and that you’re ready to make changes to deal with these and other challenges if they arise.
Explore Your Financial Options
Having a backup plan isn’t just about dealing with contingencies – like having a place to live if you don’t find a new house to buy fast enough – but also about finances. You need to have options if you do need to rent a place in the short term or if you do need to shoulder two mortgages while your house isn’t selling.
For example, you can request a contract contingency with the house you are buying that says it depends on whether your current home can be sold. That can let you off the hook financially if things don’t come through, but it can also make it harder for you to buy a house if it’s a competitive market. If you are buying a house before your home sells, you can also apply for a bridge loan, which can give you the money you need for a deposit while you are waiting for the current house to sell. You may also be able to ask the buyers of your new home to allow you to rent it from them while you are waiting to buy your new home.
Talk through your financial options with a mortgage broker, and work on a strategy with your realtor. With the right guidance and the ability to be flexible, you will successfully sell your house and buy a new one with a minimum of complication.
I qm ready to help guide you through the process, whether you are looking to buy a house, sell a house, or both. I can help you sell your home quickly and find the right new home. I’ll counsel you on your options along the way, and we’ll negotiate to help you get the concessions you need to make the buy-sell process a little easier. Contact me so we can discuss your next steps!