Are you nervous about buying a new home while selling yours? There are always concerns when it comes to finding the “sweet spot” of buying and selling a house at the same time. Well, I’m here to help you transition from getting your home sold to settling in and enjoying your new home – stress free.
The first question that usually crosses the mind when deciding to sell and buy is, “Should I buy a house or sell mine first?”
Deciding whether you should first sell your current home or buy a new one or sell your home first and buy later is a common debate amongst homeowners. There are typically 5 possibilities in a selling your house before buying a new one – or vice versa. As you read through, think about having a backup plan based on your own situation and evaluate your best- and worst-case scenarios.
- The Double Closing. In this scenario, the buyers and sellers both agree to have the closing on the same day. This is the best-case scenario for most people. However, coordinating this can be stressful because there are a lot of moving parts that need to happen for things to come together on the same day.
I’ve seen cases where a lender doesn’t get the mortgage documents to a lawyer in time, and the effects can be disastrous. It can jeopardize the purchase going through and can result in a lawsuit for extra moving costs or failure to complete a purchase and sale contract.
It is critical that the paperwork is in order and funds coordinated in advance of closing day. This is an ideal scenario from a mortgage standpoint as well because they can close out one lane and start another the same day.
- Buying First. Buying a home before you sell yours is feasible, but only if you have the money. We usually only see this when you have enough existing home equity to purchase your next one without getting a second mortgage.
Or, you have enough equity or cash for a down payment and with the financial ability to handle two mortgages. Always check with your mortgage specialist regarding your moving plans. That way you can negotiate your purchase and sale agreements accordingly.
This scenario allows you to pursue a purchase if your dream home happens to come on the market prior to receiving an offer on your home. It also allows for a gradual transition of moving into your new property.
This can be a great benefit if you want your home to sell fast. By moving out of your existing home you can properly stage and clean your home. This will also alleviate the stress of rushing to pick up the home, cart off the kids, and locking up the pets every time there is a showing.
But, you should mentally prepare yourself and anticipate paying for 3-6 months’ worth of double mortgages. In a seller’s market it will most likely be 30-60 days for it to close – and that’s if it is priced properly.
Keep in mind that if you can get a second mortgage, the first payments don’t usually start until 4-6 weeks from the signing so it could be a month or two before you are paying just one mortgage.
- Selling First. Typically, this isn’t a popular choice for most people. If you sell your home first, you will need another place to live until you find or close on the purchase of a new house. People will usually either need to find a short-term rental, stay in a hotel, or temporarily move in with friends or family.
While this ensures that you get what you want – especially if you have unique needs or feature requests, it will also require moving twice and adding the cost of rent or paying for storage which may impact the budget you have for your house purchase
- Overlap. On the flip side, buying a new home while selling yours can often be worked out. Many offers include contingencies where the purchase is contingent on them selling their home. Many sellers request a closing date of 60 or more days to give them more time for their property to sell.
As a realtor, I can provide valuable data on average days on market and what listing price your property should sell for within a certain timeframe. If you price your home over market value, then you can expect your home to take a relatively longer time to sell.
- Rent Back. This option is not favored by many. In this final scenario, you can sell your home, but request the buyer let you pay rent back until you can purchase a house. This is not recommended by lawyers and industry members due to risk of the property being damaged in the interim, and other factors that could result in a lawsuit.
However, this would give you funds to work with to purchase a new home and the time look for the one that suits you. If marketed properly, it may be enticing to buyers who want to secure a property but can’t move right away.
In a seller’s market, be sure to analyze your current situation and reap the rewards. For example, if you are changing housing brackets – such as moving from first-time homebuyer status and leveling up to an executive or luxury home style. You will likely find more inventory to choose from.
Or, if you your first home mortgage loan was set at a high interest rate, you may be able to refinance while increase your home buying budget due to the current lower rates.
So analyze your options, see what kind of mortgage payment you can now afford, search the market, and most importantly, talk to your realtor!
If you would like to talk more about the home selling process or receive a free home consult, send me an e-mail or text me from the links below. I would be happy to help!