Buying and Selling a House at the Same Time: Where to Begin
Timing is everything when it comes to purchasing a new home at the same time that you are selling your old one, along with some luck, of course. Even though you can’t control everything that takes place during the complicated process of buying and selling a home, there are some things you can do to set yourself up for a smooth closing, and it’s even possible that it could take place on the same day!
Take into consideration the following important information regarding how to simultaneously buy and sell a home.
Analyze the state of the local real estate market.
When it comes to choosing the right time to buy or sell a home, the state of the local real estate market is frequently the single most important consideration. It doesn’t matter if you’re just moving across town or across the country; it’s important to have a solid understanding of the market you’ll be entering either way. You will need to make adjustments to your timing based on the fact that you are selling in one market and buying in another market. The local climate of the real estate market can have a significant impact on the total amount of time needed to buy and sell property.
What is meant by the term “buyers market”?
When there are more people looking to buy a home than there are available homes, the market is considered to be in the buyer’s favour. When the market is favourable to buyers, it will likely be easier for you to find a new home than it will be to sell the one you currently live in. There is a possibility that the sellers will be open to the idea of accepting a contingent offer, which indicates that you are willing to buy their house on the condition that you first sell the one you currently own.
What is meant by the term “sellers market”?
When there are more people looking to purchase a home than there are available homes on the market, this is known as a seller’s market. In a market that favours sellers, it is likely that you will be able to sell your current home more quickly than you will be able to find a new home. You might want to think about asking the buyers to conduct a rent-back after the closure of the deal so that you have more time to find a new place to live.
If you find yourself…
What must be done?
Buyers’ market
Make an offer that is subject to the completion of a sale.
Buyers’ market
Make a request for a later closing time.
Sellers’ market
Make an offer that is subject to the terms of a potential settlement.
Sellers’ market
Demand the signing of a rent-back agreement.
Choose a real estate agent with a lot of experience.
Buying and selling at the same time can be a challenging and, at times, intimidating process; therefore, it is beneficial to have an experienced individual by your side during this time. Not only will an experienced local agent be able to assist you in determining the current worth of your property on the market, but they will also be able to guide you through the process of timing, strategy, and negotiation.
You can arrive at a listing price with the assistance of an agent.
One of the most important things that your real estate agent can do for you, in addition to answering questions about the process and assisting you in negotiations, is to assist you in finding the ideal listing price for your home. This is a price that will allow you to sell in the amount of time that you want and for an amount of money that will allow you to move on to the next phase of your life. They will base the price on their knowledge of the local market as well as comparable sales in the area.
Don’t forget to conduct interviews.
Do not sign a contract with the very first real estate agent that presents themselves to you. It is crucial to entrust your business to a genuine professional, particularly when you are buying and selling at the same time, because this is the time when you truly need someone who can guide you toward making the best choices. In addition, if you are going to buy a home and sell a home in the same area, you should seriously consider utilising the same real estate agent for both transactions. This will make it much easier to communicate.
Get a grasp on your financial situation.
After you have selected an agent and gained a general understanding of the market in your area, it is time to become familiar with your figures. Get in touch with both your mortgage lender and your financial planner to find out what options are available to you given the circumstances of your finances. Which direction you go in can be influenced by a number of factors, including the amount of liquid cash you have, the amount of equity you have in your house, and the loan products you are eligible for.
Determine your home’s likely resale value
Understanding how much your house could realistically sell for on the market at the moment is an important aspect of analysing your equity. Consider commissioning a pre-inspection to determine the extent of the work that has to be done to your home before you put it up for sale, as well as the kinds of concessions you’ll need to make to a buyer in order to cover the cost of those repairs.
Be aware of the amount of equity that you currently have in your property.
If you are selling a house that still has a mortgage on it, you should do some preliminary research to determine how much equity you have. Equity can be defined as the amount that is left over after the current market value of your home is subtracted from the amount that is still owed on your mortgage. Also, think about whether or not you could buy a home without having to use any of the equity in your current home. Keep in mind that you won’t be able to tap into the equity you’ve built up in your house until after the sale has been finalised.
Purchasing a home prior to selling one’s own
If you decide that you want to acquire a second house before selling your primary residence, the following are some things you can do to make that happen:
Make an offer that is subject to the following sale conditions: In the event that this transpires, you will prioritise the search for a new residence over the process of putting the current one up for sale. Once you have found a house that you are interested in purchasing, you will make an offer on it that includes a sale and settlement contingency. This implies that you will only purchase the home if you are able to sell your current residence. In most cases, the sellers of the home you’re interested in purchasing have the right to continue looking for alternative offers. The use of contingencies is most successful in buyer’s markets, which are characterised by a low probability that the seller will get another offer.
You have the option to ask for a closing date that is farther out than the normal 30-45 days if you are certain that your current house will be sold in a relatively short amount of time. In this scenario, you are requesting an extended closing. This will allow you enough time to sell your current home, apply the money from the sale toward the down payment on a new home, and then sell the new house. In the same way that you have a better chance of success with contingent offers, you will have a better chance of success with this method in a buyers’ market.
Purchase with savings: If you are in the financial position to do so, the simplest route is to use your savings to pay for your new down payment, and then sell your old home after the dust settles. If you are not in the financial position to do so, the next best option is to use your savings to purchase a home. Bear in mind that in addition to these charges, you will need money to cover moving expenses, inspection fees, and closing costs.
Buy with a home equity line of credit: A home equity line of credit, also known as a HELOC, is a type of loan that lets you borrow money against the equity in your present house. You might be able to take up a home equity line of credit (HELOC) to get the money you need for your down payment, and then you could pay it back when you sell your house.
Buy with the assistance of a bridging loan: A bank may provide you with a bridge loan, which is a short-term loan, to fund your down payment until your sales transaction officially closes. It is important to have an early conversation with your banker about this choice, as some financial institutions do not provide this service and it may be challenging to qualify for it.
Your first residence should be rented out: You could always locate renters for your old property if you don’t need the money from your first home to make the down payment on the new home. This would allow you to cover the costs of the mortgage while delaying the need to sell while you’re buying a new home at the same time.
Advantages of purchasing prior to selling
• You can move in right immediately because you have a place to go.
• You are less pressured to make quick buying decisions because you only have to move once, which allows you to save money on storage units or costs associated with temporary housing. • You can always stay in your current home a little longer if you don’t find a property that you love if you’re looking to buy.
Cons of selling your home before buying a new one
• You may experience a sense of urgency to sell, which may persuade you to accept an offer that is lower than you would have otherwise.
• Contingent offers are less competitive, particularly in markets that move quickly.
If you have your money invested in your existing property, you might not have enough cash on hand to make a competitive offer on another home.
Being a landlord is not always a stroll in the park, so keep that in mind if you ever decide to rent out your existing house. When you finally do make the decision to sell, you may find it difficult to do so while tenants are still occupying the property.
Putting a house up for sale prior to purchasing one
Here are some things you can do to make the process of selling your current house go more smoothly in the event that you have made the decision to sell it first.
Make an offer subject to the following conditions being met: In this scenario, you will start the process of looking for a new place to live only after you have received an offer on your current residence and before the sale is finalized. When you find a property that you are interested in purchasing, you will make an offer on it that[NM1] includes a settlement contingency. This means that the purchase of the new home is conditional upon the successful completion of the sale of your current residence. This strategy is most effective in a market that favors sellers, such as when you may anticipate receiving bids on your current house in a reasonable amount of time.
Find a place to live in a rental that is only temporary: It is true that you will have to relocate twice, but finishing one sale before beginning another one can sometimes be the option that results in the least amount of stress. This is because it removes the stress associated with the timing and gives you the opportunity to look for a house that you truly adore.
Make a rent-back agreement: A rent-back provision is when you go through with the sale of the home with the agreement that you can rent the home back from the new owners (and continuing living in your home during that time) for one or more days. This allows you to continue living in the home during that time. This choice may provide you with additional time to look for a new residence, while at the same time permitting you to retain access to the proceeds from the sale of your current property. Remember that this strategy is most effective in a market favouring sellers, when buyers are forced to be more adaptable with regard to the terms of the contracts they sign in order to secure the home of their dreams.
Advantages of selling a home before purchasing one
It can be less stressful to close the book on one chapter before focusing on your next move because you know exactly how much equity you’ll have available to put toward your new home, you can easily roll over your existing equity into the new purchase, and you know exactly how much equity you’ll have available to put toward your new home.
Negative aspects of buying before selling
It is highly likely that you will need to find a temporary housing situation. The fees associated with storage and moving again might mount up quickly.
