Juggling a Home Sale and Purchase at the Same Time
Selling your home and buying a home are two significant real estate transactions that require your patience, commitment, and focus. Each of these processes involves many steps, significant attention to detail, and hours of effort to ensure that the completed sale meets all of your expectations. Alone, selling your home or buying a home is quite a feat — attempting to do both simultaneously is another endeavor altogether. If you’re planning on juggling a home sale and purchase at the same time, here are a few tips to make these dual transactions as smooth as possible.
Although it’s typically easier to buy and sell a home separately, there are quite a few scenarios in which a homeowner would benefit from conducting both transactions at the same time. The biggest dilemma most homeowners face is determining which transaction they should attempt to finalize first. Each homeowner’s situation is unique and specific factors will influence their decision. For example, someone who needs to relocate quickly should attempt to sell first while someone who has the finances on-hand to make an offer on their dream home should try to buy first.
Some benefits to selling first may include avoiding two simultaneous mortgage payments and having cash-on-hand to make a down payment on a new home. However, selling your home initially may make you feel pressured to buy quickly and force you to pay additional costs for temporary housing and storage. If you choose to buy before you sell, you’ll have a place to move your belongings and you may feel less stressed during the home sale process but you also run the risk of not qualifying for a new mortgage or having your funds tied up in your older property.
3 Tips for Selling Your Home Before You Buy Another
- Request a rent back contingency. Before accepting an offer, request a rent-back contingency from the buyer. This contingency will allow you to rent the home from the buyer temporarily until you close on your next property.
- Have a backup plan. In the event that you must vacate the property before purchasing a new one, you’ll need a backup plan. Research short-term rentals in the area and price out storage units nearby.
- Prepare your savings account. Without access to the equity in your original home, you need to be prepared to pay for closing costs in addition to your down payment. Make sure your savings are large enough to cover any sudden expenses until you receive the income from your home sale.
3 Tips for Buying a Property Before Selling Your Home
- Include a home sale contingency with your offer. A sale and settlement contingency enables you to buy the new home only if you successfully sell your old home. Although this allows the seller to still entertain offers from other buyers, it provides you with a safety net should the sale of your home fall apart during negotiations.
- Make sure your old home is ready to sell before you make an offer. Shopping for a new home is exciting, but you must first make sure your old home is ready to sell. Complete all repairs, remodels, or renovations to the entire home so it is presentable when you’re ready to list.
- Budget accordingly and anticipate a low offer. After you’ve closed on your new home, you need to keep your finances balanced. Even if you’ve slightly exceeded your budget during the buying process, you should still be prepared to accept an offer lower than the asking price on your former home. Conceding a few thousand dollars is better in the long run than attempting to afford two mortgages for months at a time.
Selling your home while buying a house is quite a feat but success in both endeavors is possible. Give me and my team a call for advice before deciding which transaction to tackle first.
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