Juggling the sale of your old home and buying a new one is often a stressful and overwhelming process. In an ideal situation, you would be able to sell your home and then purchase and move into your new home right away. Unfortunately, in reality, both of these tasks are more complicated. There is a lot of paperwork, contracts, and financial hurdles you have to go through. Not to mention getting the best price, finding the home of your dreams, and relocation to your new place. While it’s almost impossible to close both deals concurrently, you can significantly minimize the gap with good logistics and coordination. For that reason, we’ve prepared this guide on buying and selling a home at the same time.
To buy or to sell first?
To close concurrently, you will have to make an agreement about dates between your buyer, your seller, and yourself. Even if you time your sale and purchase as closely as possible, one will likely happen slightly sooner than the other. Naturally, both approaches come with different benefits and risks. What you opt for will depend mostly on your financial and other circumstances.
Pros and cons of buying first
The most obvious advantage is that you have a home waiting for you. You don’t have to worry about the gap period between selling your house and purchasing a new home. There’s no need to find a place to stay or wonder what to do with all your belongings. Also, that means you have to relocate only once, and if you’re moving with kids, that is a great advantage.
However, it also means you’ll be burdened with two mortgages until you sell your old home. It can prove exceptionally difficult, especially if your property is harder to sell than you’ve expected.
Pros and cons of selling first
On the other hand, selling your home first means you’ll know exactly how much money you have at your disposal. Additionally, being free of mortgage will increase your debt-to-income ratio and enable you to get a better loan in a shorter amount of time. That means you’ll have more money and time to ensure your new home is exactly what you want.
However, it also means you need to find housing and/or storage solution. Although selling before buying is less financially risky, finding a perfect home isn’t easy. It still may impact your budget in the long run, and you’ll have to move twice.
Plan ahead and prepare
When you set selling and buying your home at the same as your goal, it’s a good idea to prepare everything you can several months in advance. Even if some of these activities can seem simple compared to everything else you need to do, they still might take a lot of time. Here are some ways to speed up the sale of your home when the time comes:
- declutter – your home will look more attractive to buyers, and you’ll have fewer items to relocate
- paint the walls in neutral colors
- handle the minor repairs
Additionally, you can make a list of requirements and dealbreakers for your new home. That will make home-hunting less overwhelming, and you’re more likely to find the right home for you.
Buying and selling a home at the same time is simpler if you have a trustworthy agent
Having a seasoned real estate agent at your side will be of great help. Ensure you choose the agent who knows the local market inside out and has a lot of experience dealing with homes similar to yours. Not only will they help you close both deals at the best price and as soon as possible, but they can also provide you with valuable advice through both processes.
Additionally, you might need to hire two real estate agents. For example, if you want to sell your Portland home, you’ll need an experienced agent who knows everything there is to know about the local market conditions in Portland.
However, it’s even more important to find a reliable agent in your new city if your new home will not be in the state of Oregon. You will also need reliable interstate movers if you plan to leave Oregon and settle elsewhere. You will need the agent and movers who know the area better than you. Therefore, the agent will help you find the right home, and the movers will get you there care-free. Also, it’s essential to carefully plan your relocation. Moving to another house in the same street is quite daunting, and an interstate move comes with more challenges.
Assess your financial situation in advance
Assessing your financial situation and possibilities is crucial. Being realistic both about the sale price you can achieve and about the amount of money you can spend on your new home will save you a lot of headaches along the way. Find a reliable lender and discuss the financial matters with them. Consider your savings and assets. Also, try to improve your credit score and debt-to-income ratio before the time for purchase comes. Similarly, become familiar with all the costs of selling your home and all the other relevant expenses.
Consider buying with contingency to sell
Most homeowners can’t afford to buy a new home before they sell the old one. For that reason, many people opt to buy with a contingency to sell. Although it minimizes the risk for you, it also makes your offer weaker. And if you’re buying in a seller’s market, the seller is more likely to accept an offer without contingencies. So, while you won’t financially overstretch yourself, you might lose the opportunity to buy your dream home.
Have a plan for the ‘gap’ period
If you sell your old home before the purchase of a new one is finished, make sure you have a good plan. There are several ways to deal with this situation:
- rent back contingency – the buyer of your old home agrees to rent it back to you for 30 to 60 days
- a bridge loan – a short-term loan that enables you to ‘bridge’ the gap between the homes
- stay with friends or family
- short-term rental
When you’re buying and selling a home at the same time, there are many obstacles and unplanned situations. While many things are out of your control, with good preparation and logistics, you can significantly reduce the stress and make everything go as smoothly as possible. Follow this guide and choose the course that works best for you.