Selling your home when you have not yet looked around for a new one is not for the faint-hearted. This is more so when the demand and prices of new homes are rising and the supply and price of homes for sale are falling. Trying to sell and buy a home all at once is challenging and the logistics of the process can be emotionally draining.
Searching for your dream home is exciting and gets the adrenalin flowing. But ask anybody who has gone through this experience and you will know that it is stressful too. When there are too many competitors vying for limited inventory, there will always be an intense struggle to get a home. However, it does not make any sense to wait out a competitive market now because the number of listings is not expected to improve in the short-term future.
That doesn’t mean, though, that you should just throw up your hands and give up on moving altogether. In fact, as a current homeowner, you could be in a better position than most to capitalize on a seller’s market and make a smooth transition from your old home to a new one.
We can help you prepare for the road ahead and answer any questions you have about the real estate market. For example, here are some of the most frequent concerns we hear from clients who are trying to buy and sell at the same time.
![Buying And Selling At The Same Time [BLOG]](https://i.ytimg.com/vi/pL0Oz27pZb4/maxresdefault.jpg)
“WHAT WILL I DO IF I SELL MY HOUSE BEFORE I CAN BUY A NEW ONE?”
This concern is understandable since the real estate market is volatile, and even if you do sell your house quickly, there is no guarantee that you can move into a new one soon. However, with a little bit of luck, compromise, and creativity, you can get into a win-win situation.
Here are some ways that you can be in a favorable position when you sell your home and are yet to find a new one.
Tip #1: Flex your muscles as a seller.
With a shortage of listings and buyers desperate to get a home of their choice, it is common to see them make certain concessions to sellers to get a good bargain. Use this opportunity to ask the buyer to agree to a rent-back clause where you will continue to live in the house for a certain period against a negotiated fee.
This arrangement is very useful for sellers wanting to use their home equity for a down payment against a new home and who are not yet ready to move into the next home. However, lenders generally restrict this rent-back period to 60 days and insist on a contract and a security deposit to cover any unexpected repairs that may be needed during this period for property damage.
Tip #2: Open your mind to short-term housing options.
It is tough to move out of your existing house before you can arrange for a permanent roof over your head. Moving in temporarily with family or friends is an option but you can also explore vacation rentals, month-to-month rentals, or furnished apartments on rent. Put your furniture in storage if space is an issue in any of these types of accommodation.
If you are lucky, you may even find a short-term rental arrangement in the neighborhood where you plan to buy your new home. You can then explore the area, know the various amenities available, and have an idea of the community around here. This will help you to make a more informed decision about your upcoming purchase.
Tip #3: Embrace the idea of selling now and buying later.
If you cannot get the timing right in selling and purchasing a house, do not get stressed out and panic. Instead, work on a plan and take one thing at a time. As we shall see, there are a few advantages of selling your house first rather than the other way around.
The most important benefit is that you will have the cash in hand from the sale of the house. This will greatly help you in the home-buying process. You do not have to worry about the down payment or closing costs.
You can even offer the seller a lump sum advance to hold on to a house you like if your mortgage approval takes time. Cash is always king in any real estate deal and having enough in hand while buying a house will smooth over any hurdles that you might face.
“WHAT IF I GET STUCK WITH TWO MORTGAGES AT THE SAME TIME?”
This is one of the most common concerns that we hear from buyers who are selling a home while shopping for a new one, and it’s realistic to expect at least some overlap in mortgages. To make sure you don’t get into a situation where you are carrying dual mortgages for longer than you can afford, examine your budget and calculate the maximum number of months you can afford to pay both.⁴
If you simply can’t afford to carry both mortgages at once, then selling before you buy may be your best option. (See Tip #3 above.) But if you have some flexibility in your budget, it is possible to manage both a home sale and purchase simultaneously. Here are some steps you can take to help streamline the process:
Tip #4: As you get ready to sell, simplify.
You can condense your sales timeline if you only focus on the home renovations and tasks that matter most for selling your home quickly. For example, clean and declutter all of your common areas, refresh your outdoor paint and curb appeal, and fix any outstanding maintenance issues as quickly as possible.
But don’t drain unnecessary time and money into pricey renovations and major home projects that could quickly bog you down for an unpredictable amount of time. We can advise you on the repairs and upgrades that are worth your time and investment.
Tip #5: Prep your paperwork.
Get your paperwork in order as early as possible, soon after you decide to sell your house and buy another one. This holds for both your existing house and the one that you intend to buy.
For your new house paperwork together early. If you require a mortgage loan, complete the documentation for pre-approval. Not only will you know your financial limit for buying a home but you will also shorten the amount of time needed to process your loan.
The same applies to the home you are selling. Compile the documentation including repair records, renovation permits, and appliance records. This will make selling your home fast and smooth as you can answer the queries of buyers quickly should they arise.
Tip #6: Ask us about other contingencies that can be included in your contracts.
Part of our job as agents is to negotiate on your behalf and help you win favorable terms. For example, it’s possible to add a contingency to your purchase offer that lets you cancel the contract if you haven’t sold your previous home.
This tactic could backfire, though, if you’re competing with other buyers. We can discuss the pros and cons of these types of tactics and what’s realistic given the current market dynamics.
“WHAT IF I MESS UP MY TIMING OR BURN OUT FROM ALL THE STRESS?”
When you’re in the pressure cooker of a home sale or have been shopping for a home for a while in a competitive market, it’s easy to get carried away by stress and emotions. To make sure you’re in the right headspace for your homebuying and selling journey, take the time to slow down, breathe and delegate as much as possible. In addition:
Tip #7: Relax and accept that compromise is inevitable
Rather than worry about getting every detail right with your housing search and home sale, trust that things will work out eventually––even if it doesn’t look like your Plan A or even your Plan B or Plan C. Perfecting every detail with your home decor or timing your home sale perfectly isn’t necessary for a successful home sale and compromise will almost always be necessary. Luckily, if you’ve got a good team of professionals, you can relax knowing that others have your back and are monitoring the details behind the scenes.
Tip #8: Don’t worry too much if your path is straying from convention
Remember that rules-of-thumb and home-buying trends are just that: they are estimates, not facts. So if your home search or sale isn’t going exactly like your neighbor’s, it doesn’t mean that you are doomed to fail.
It’s possible, for example, that seasonality trends may affect sales in your neighborhood. So a delayed sale in the summer or fall could affect your journey––but not necessarily. According to the National Association of Realtors, the housing market tends to be more competitive during the summer and less competitive during the winter.⁵ But it’s not a hard and fast rule, and every real estate transaction is different. That’s why it’s important to talk to a local agent about your specific situation.
Tip #9: Enlist help early.
Which leads us to our final tip: If possible, call us early in the process. We’ll not only provide you with key guidance on what you should do ahead of time to prepare your current home for sale, we’ll also help you narrow down your list of must-haves and wants for your next one. That way, you’ll be prepared to act quickly and confidently when it’s time to list your house or make an offer on a new one.
It’s our job to guide you and advocate on your behalf. So don’t be afraid to lean on us throughout the process. We’re here to ease your burden and make your move as seamless and stress-free as possible.
BOTTOMLINE: COLLABORATE WITH A REAL ESTATE PROFESSIONAL TO GET TAILORED ADVICE THAT WORKS FOR YOU
Buying and selling a home at the same time is challenging. But it doesn’t have to be a nightmare, and it can even be fun. The key is to educate yourself about the market and prepare yourself for multiple scenarios. One of the best and easiest ways to do so is to partner with a knowledgeable and trustworthy agent.
A good agent will not only help you evaluate your situation, we will also provide you with honest and individually tailored advice that addresses your unique needs and challenges. Depending on your circumstances, now may be a great time to sell your home and buy a new one. But a thorough assessment may instead show you that you’re better off pausing your search for a while longer.
Contact us for a free consultation so that we can help you review your options and decide the best way forward.
Sources:
- Board of Governors of the Federal Reserve System, FEDS Notes – https://www.federalreserve.gov/econres/notes/feds-notes/housing-market-tightness-during-covid-19-increased-demand-or-reduced-supply-20210708.htm
- Federal Reserve Bank of St. Louis, FRED Economic Data – https://fred.stlouisfed.org/series/MSPUS
- Realtor.com – https://www.realtor.com/advice/sell/what-is-a-rent-back-agreement/
- Bankrate.com – https://www.bankrate.com/real-estate/sell-your-house-while-buying-another/
National Association of REALTORS – https://www.nar.realtor/blogs/economists-outlook/seasonality-in-the-housing-market
