Buying a home in and of itself is a big undertaking, and when you’re also selling your existing home at the same time, things can get downright complicated, stressful, and overwhelming. There are so many things that need to get done. You have to spruce up your home so it’s ready for viewing. You have to make time to go house hunting. Then you go through negotiations and escrow and all the closing procedures. And once the deals close, then you actually have to pack up and move. Phew! We’re tired just typing all that.
But rest assured, people buy and sell simultaneously all the time, so it can definitely be done. Keep reading for some important things to know about buying and selling a home at the same time and tips on how to navigate the process.
Pros and cons of selling versus buying first
In an ideal world, you’d sell your home the same day you buy a new one, but that’s rarely the case. The reality is that one happens before the other, and each scenario has its pros and cons. Here’s an overview of what to keep in mind if you sell first or buy first.
If you buy before you sell…
- It’s easier to move, and you only have to move once, which saves you money.
- You’ll feel less pressured to decide on a new home and can enjoy a relaxed house-hunting process with no regrets or feeling like you settled.
- You may also feel rushed to sell once you buy your home so you don’t have to pay two mortgages. This may lead to accepting offers that are below the asking price just so you can get the old home off your hands.
- You may not have enough cash to put toward your new home because your money is tied up in your current home.
- There’s a chance you may not qualify for a new mortgage if you still have an existing one.
- If you decide to rent your current home while you try to sell it, you’ll have to deal with the responsibilities of being a landlord.
If you sell before you buy…
- You’ll need to find a temporary place to live while you house hunt. This also means you’ll need to move twice and pay for moving costs and storage.
- Since you’ve already sold your home, your cash will be easily accessible, and you’ll know exactly how much equity you have and how much money you can put down toward a new home.
- You won’t risk having to pay for two mortgages at the same time.
- Once you sell your current home, depending on your temporary living situation, you’ll either feel like you can take your time with the buying process until you find the perfect home. Or, if your temporary living situation is not ideal, you may feel pressured to rush the process and settle for a house that’s not a great fit so that you can get settled and return to normalcy.
7 tips for navigating the buying and selling process at the same time
Prioritize your wellbeing
There is so much that needs to happen when you’re selling your home and looking for a new home, and it can all really take a toll on your wellbeing. As you go through the process, ensure that, first and foremost, you are prioritizing your mental, emotional, and physical wellbeing. This is a great time to step up your self-care so you have the fuel to show up feeling good throughout the process and give yourself permission to take other things off your plate that can wait until you’re all settled in your new home.
Prepare for delays
One thing you can definitely expect during the home buying and selling process is delays. As much as we can try to plan, everything doesn’t always go like we think they will. Deals can fall through. Appraisals don’t go as expected. Inspections may find issues that need fixing. And when one delay happens, that usually triggers more delays. Going into the process knowing that delays are likely to happen will help you not feel thrown off course when they do.
Plan for a gap period
If you end up selling your current home before purchasing your new home, there may be a gap of time when you’re without a home. Planning for this gap period will save you a lot of stress and headaches. Ensure you have a place to stay, whether it’s with friends and family or a temporary rental home. Also, plan where you will store your belongings during this time as well. You may not end up needing to resort to your gap period plan, but it’s best to be prepared just in case.
Work with a trusted agent
We can’t emphasize how helpful it is to work with a trusted agent. The buying and selling process is no joke, and having an expert guide you through it will make it so much easier. A reliable agent can help you map out an ideal timeline and advise you on decisions as you navigate the road bumps that may pop up.
Have a financial cushion
The financial side of things can also be tricky when you’re selling and buying simultaneously. If you try buying before selling, all your money may be tied up in your existing home, and it can be challenging to get approved for a second mortgage while you still have your existing one. And if you do buy first, you may end up paying two mortgages until your current home sells, which can sometimes take months or even a year. If you sell first, you may have to pay moving expenses twice, once when moving into your temporary home and again once you find your forever home. That’s why, before jumping into the buying and selling process, it’s a good idea to have a financial cushion you can tap into if needed.
Explore other financial options
All that said, there are things that you can do to help you navigate the financial transition. Lenders often offer loans such as a bridge loan or a HELOC (stands for Home Equity Line of Credit), which are short term loans that tap into the equity of your current home so you can use it as a down payment on your new home. However, these may come with stipulations, so be sure to read the fine print before committing. You can also add a contingency clause that makes the purchase of your new home contingent on the sale of your current home. This isn’t foolproof, though. Sellers get many bids, and a contingency cause might kick you out of the running. Your agent can help advise you on the best option for your specific situation.
Lastly, selling and buying your home at the same time will require major patience on your part. There are many different timelines you’re working with, so it’s important to surrender the process and be flexible with timing. Trying to rush and control the situation will only make you more frustrated and impatient. Trust that you’re in good hands with your real estate agent, and remember that everything happens in perfect timing.
SOURCE: HALTON PARDEE