Buying a house is both an exciting and stressful endeavor. That stress can be compounded if you have to sell your current house at the same time. If you aren’t able to time things perfectly, you could end up paying for two mortgages at once, not having the money to purchase a new home, or having to find a temporary place to live.
Here are some tips to avoid or protect yourself against these issues.
Enlist an experienced, licensed, reputable real estate agent
Depending on which state you live in you also may be required to hire a real estate attorney. Use the same agent (and attorney if required) to help you navigate both the buying and selling process. They can help you determine how to price the house you are selling as well as figuring out how much you can comfortably spend by keeping in mind down payment and closing costs.
Take stock of your financial status
Ideally, you want close on the house you’re selling within a day or two of the house you are buying, but things don’t always work out that way. If you need the money from the sale of your current house to be able to afford your new house, which most people do, make a contingency offer that states you only can purchase the new home if your current home sells. Also, if you are in danger of losing loan approval if your current house does not sell, talk to your lender about including a contingency in the financing as well.
Consider the current housing market
If you are in a buyer’s market, there are more houses for sale than people looking to buy. A buyer’s market means there is a lot of housing stock to choose from, competition is high, housing prices are lower, and it may take more time to sell your house. In this situation, you may want to wait to make an offer on a new house until you have a solid buyer in place for your current house.
A seller’s market means that there are fewer houses for sale so the good ones are likely to go quickly. In this scenario, sellers are less likely to accept contingency deals – this is good for you when selling your current house but not so good when you are looking to buy. In a seller’s market, it’s important to ensure you have your finances in good shape so you can make the best offer possible on your new home.
Negotiate the timing
While negotiating on price is important, it’s also critical to line up the closing dates of the buying and selling of your homes to happen concurrently. That way you don’t have to pay two mortgages at once and you can move out of one home and into the next without any lapse.
Hope for the best, but plan for the worst
Life doesn’t always go to plan. You may sell your current home but then not find your dream home right away or the sellers may take a better offer. You may find the home you’ve always wanted but not be able to sell your current house right away. Never fear – you aren’t the first person who has faced these dilemmas.
If your house sells but you haven’t purchased a new one yet, you can look into a temporary rental or stay with friends or family until you find a new place. Be sure to plan for the costs associated with renting as well as getting a storage unit to house your belongings in the interim. You may also be able to arrange a rent-back agreement where the buyers of your current house allow you to stay there for a short period of time while you rent from them.
- Homebuying tip: If you want to make an offer on a new house before your current house has sold, you may be able to pay for the down payment, closing costs, etc. with help from family, with your savings, a home equity loan, or a bridge loan. You may also want to consider renting out your current home until you can sell it.
While it can be challenging to buy and sell a home at the same time, experienced realtors have been through the process many times and will help make it as easy for you as possible. At Valley, we want to help too. We’d love to help you make the transition to the home of your dreams.