Buying or selling a house is stressful enough when the steps are taken one at a time, but most people aren’t that lucky. Homeowners follow their jobs or their dreams to move to different cities and states, which leaves them trying to juggle the simultaneous home buying and selling process.
If this sounds like you, don’t worry. You aren’t the first person to try buying and selling a home at the same time, and you won’t be the last.
Follow these tips to make sure the process goes smoothly without leaving you overwhelmed.
#1) Meet With Your Financial Planner and/or Mortgage Lender
It is important to meet with your financial planner, if you have one, before you buy or sell your house. Many planners that serve their clients as fiduciaries can help connect you with lender or even discuss your budget and how much house you can afford. Financial planners and lenders are two important people involved with your real estate transaction. If you don’t have a planner, coordinate with your loan officer and spend some personal time on budgeting…when you are buying and selling a home at the same time its very important to have your ducks in a row.
Depending on how much you have put into your existing house and how much cash you have on hand, these financial experts may make certain recommendations for how you should proceed. You don’t have to go through this process alone, there are experts who are here to help.
#2) Ask About a Bridge Loan
As the name sounds, a bridge loan is meant to help bridge the gap between when you have funds for your house and when you don’t.
This is a short term loan that is typically meant to cover the down payment and closing costs until you sell your house. When you sell your old house, you can pay off the bridge loan and then resume normal payments on your new house.
Not all financial institutions offer bridge loans, which is why it is important to meet with your loan officer early and discuss your options. It will also help to have a backup plan in case this isn’t an option for you.
#3) Use a Sale and Settlement Contingency
One of the hardest parts of buying and selling a home at the same time is dealing with finances. How can you afford to buy a new house when you haven’t sold your first one?
One tool that helps with this is a sale and settlement contingency.
When you make an offer on a house, you are doing so on the basis that you will buy it when your existing home is sold. This is your way to lay claim on a property even if your old house is still on the market.
Homeowners are able to reject this offer or contingency if they think they can get a better or faster offer. After all, they might not want to wait for your home to sell – especially if that can take several months. The sale and settlement contingency is best in buyer’s markets because homeowners are less likely to get other offers and will be more motivated to take yours.
#4) Negotiate an Extended Closing
If your sale and settlement contingency is rejected on a home that you really want, your next option is to place a bid but request an extended closing period. Most closing periods last a maximum of 45 days; however, you can request a later closing date a few weeks (or even a month) later if you think your old house will sell.
This tactic is best if you are confident that your home will sell quickly. Otherwise, your closing date just bought you another month before you need to pay two mortgages.
#5) Consider the Rental Market as Well
If the idea of buying and selling a home at the same time overwhelms you, consider the rental market. Often times, large scale apartment communities offer short term leases.
You can also rent your current home out for passive income to cover the expenses of buying a house and paying the mortgage. If you are moving to a different state or city, you can hire a property management company to maintain the space until you are settled into your new home. Then, after your tenants have left, you can put the house on the market to sell.
Alternatively, you can also sell your existing house and then rent a space temporarily until everything closes. This is another way to see the new city or neighborhood if you are buying a house in a new city before you commit to an area.
Use Effective Agents for Buying and Selling a Home at the Same Time
Before you start the buying and selling process, find the right real estate agent for your needs.
Finding partners who can support you through the real estate process can make a significant difference in the stress levels and complexity of buying and selling a home at the same time.
Use Effective Agents and our data-driven approach to find the best and most experienced Realtors® in your area. You have a lot of choices ahead of you, but we can make this one easier by helping you quickly find and vet top real estate agents.