How to Buy and Sell a Home at the Same Time—Without Losing Your Mind
Here’s what you need to know to make sure both processes go as smoothly as possible.
Know the market first
Before you start seriously searching for a new home—or put your current home on the market—make sure you have a solid understanding of the housing market in your area (and the area where you’re planning to buy).
Ask your real estate agent: Is the market weighted toward buyers or sellers? Only then will you be able to fully strategize. In real estate, your best plan of action may depend on whether sellers or buyers are in the more powerful position.
One way to play it safe is to keep your mind open to lots of buying options. If it’s a seller’s market, you might find that you’re able to get your home sold quickly, but that the homes you inspect just aren’t up to par.
If you can widen your search and find multiple homes you’re interested in, you’re less likely to find yourself in trouble if a purchase falls through, selling your current home won’t leave you stranded.
Plan your schedule carefully…
You might be asking: Should you try to buy first, then sell—or vice versa? Both have their risks and rewards.
Selling first makes getting a mortgage or putting an offer on another house easier, but it also means you’ll need to find a temporary place to live.
Buying first means that moving will be easier, but it also skews your debt-to-income ratio, making it harder to qualify for a new mortgage—not to mention the difficulty of juggling two monthly house payments. If you decide to buy before your house is sold, make your purchase “subject to sale and settlement” of your existing home and allow longer settlement period. The other options is apply for a bridging loan and you’ll often need a fair bit of equity in your current property to qualify for the loan, so you should ask your lender whether you’ll be able to secure one before buying another property.
Bridging loans normally have higher interest rates than regular loans, but the combined cost of two moving days and a few months’ rent spent on an in-between home can exceed the additional interest you end up paying on your two home loans.
What’s more, a few extra weeks is often all that you need to secure the best possible sale price for your home.
but don’t rely on timing
Remember: You’re not the only party in this equation. For every seller there’s a buyer, for every buyer a seller.
So even if you’ve planned to sell your home first and are prepared to rent while buying, know that even the best-laid plans go awry—and that you might end up juggling both mortgages. Preparing yourself for this (however remote) possibility ahead of time will ensure a smooth transition.
Certainly, selling and buying a house simultaneously will be stressful—but carefully considering and planning for the risks and hurdles can mitigate the stress.
If you are not sure what to do, please talk to us. Our experienced agents are here to help you.
