Are You Buying and Selling a Home? Here's How to Make It Easier
This transaction can be a complicated one, so make sure you're prepared.
When you own a home but want to purchase another one, you may find yourself in a complicated situation. You probably need to sell your home in order to buy a new one. But it can be hard to sell before finding a new house because you may not end up locating the right property quickly. And making the timing line up can be a huge challenge.
If you find yourself in this position, there are some steps you can take to try to plan ahead and simplify this process. That way, you don't end up with nowhere to live or with financial obligations you can't meet.
Develop a plan
You're going to have to make a choice when buying and selling a home. Do you:
- Sell your current home first while living in it and hope you can find a new home to move into at closing?
- Buy a new home first with the hopes you can sell your old house before you move into your new one -- and take the risk of having to make payments on two mortgages?
Neither option is ideal, but your personal circumstances will dictate which is the lesser evil.
If you have very specific needs for a new property -- for example, space for lots of pets or an in-law apartment for aging relatives -- then you may decide you need to buy a new home first. Otherwise, it could take you too long to find the right property, and you might be left without a suitable place to live.
On the other hand, you may have to sell first. This could be especially true if you need a way to come up with the down payment for your new home or in order to qualify for a new mortgage. And if you cannot afford two mortgage payments, you also can't take the risk of buying a new home before your old one has sold.
See if a seller will accept a contingent offer
If you decide to buy a new house before selling your current one, approach sellers of properties you are interested in to see if they will accept an offer with the condition that you must sell your existing home first.
Sellers generally don't like this type of arrangement because their own ability to sell depends on you finding a buyer for your home. But in the right circumstances -- such as when their property has been on the market for a while -- they might be willing.
See if the buyer will rent back your house for a bit
If you want to buy a new home before moving out of your old one, see if the new buyers would be willing to let you rent your current property back from them for a while.
This would take the pressure off finding a new property since you wouldn't have to rush as much. And you'd get the money for your current home to put towards your new place.
Of course, this doesn't always work. It could create uncertainty for the buyer if it's not clear exactly how long you'll be renting. And some buyers who need to move in right away may not be willing to agree to this. But it's still a possibility, especially if it's a seller's market and you have a hot property. In those cases, buyers may be willing to adapt in order to stand a better chance of you actually selling your home to them.
Look into other available options
There are also other options to consider such as:
- Selling to an investor or iBuyer: Investors and internet companies that buy houses (iBuyers) are often willing to close on your schedule. That means you can quickly sell your house to them and close at the exact time your new home is ready. The downside is, they'll typically offer less than fair market value.
- Selling your home and renting for a while: This would mean finding a rental property and having to move twice. But it may make sense if you need the money from your home to buy a new place or if you can't afford to take the risk of paying two mortgages.
While none of these solutions is ideal, it's clear you do have some options when both selling and buying at the same time. Think through the pros and cons of each of these methods to decide what's right for you.
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