How to be Prepared for Buying and Selling a House at the Same Time
We all know that buying or selling a home can be nerve-racking. Taking on both of these tasks simultaneously often creates a unique, complex set of challenges. However, knowing what to expect when buying and selling a house at the same time can save you a lot of heartaches and worry throughout the process.
One transaction will inevitably process first when you purchase and sell a home. Protecting yourself and being ready for possible hiccups will go a long way when navigating through this tricky time.
Plan Your Transition
First things first: Make a game plan. Yes, unforeseen things are bound to happen, and curveballs will likely be thrown. But it is important to have a tentative plan.
Determine your ideal timeline. Decide when you’d like to begin the process of selling your current home and purchasing a new one. Figure out your budget while keeping your current home’s equity in mind.
Think about what you should do first: buy or sell. Below, you’ll find tips concerning each route. Planning this process is an important first step in securing your next dream home!
Selling Your Current Home First
Because most people don’t have the financial ability to have two mortgages at once, selling first is common when transitioning into a new home. In this situation, things can sometimes become complicated. To help smooth out the process, there are several things to consider and prepare for when you are selling your home first.
While selling first definitely has its pros, like avoiding two mortgages and excess financial burdens, it also has its challenges. You must think about what could happen if you sell your home but if you can’t quickly find a new home. It is important to ensure you have somewhere to store your furniture and other belongings. You have a few options if this happens, such as portable storage containers, storage units, or professional storage services.
Also, be prepared to secure temporary housing. You may have to stay in a hotel or an extended stay apartment until everything is finalized. You might also consider renting a home or living with friends and family. At any rate, it is important to have a game plan in case the “worst-case scenario” plays out.
A rent-back agreement might also be beneficial in this situation. The buyer agrees to let the seller remain in the home for 30-60 days. Typically, a rent-back amount is negotiated by the Attorneys in exchange for extra time in the home.
Suppose there is a delay in the disbursal of funds or the recording of your new home’s deed. In that case, you can also consider negotiating with the seller regarding a use and occupancy of your new residence. Because you’ve already closed on the home, you may be able to store your belongings or stay there while waiting for everything else to finalize.
When you are buying and selling a house at the same time, it is also very important to consider gap insurance. Gap coverage helps protect the “gap” of time when there are indexing delays at the Registry of Deeds. If there is a backlog at the office, there can be a delay of a day or two or more when indexing. A Gap Coverage Endorsement helps protect the buyer in this sticky situation.
Buying Your New Home First
If you have the financial ability to buy your new home before your current home sells, things will probably run more smoothly for you. You will be able to take your time when shopping for your next home, which guarantees that you will have housing available when you sell your home.
A suitable housing contingency might be worth considering for those who don’t have this kind of financial luxury. A contingent offer means certain conditions have to be met before the sale can be finalized. In this situation, a suitable housing contingency would state that you, the home buyer, have a certain amount of time for your home to sell to help fund the purchase of your new home. If these conditions are not met, the sale will not be closed, and you will not face any repercussions.
While a contingent offer doesn’t have the purchasing power of a traditional offer, it is still worth considering if you have your heart set on buying first. To boost the chances of your offer getting accepted, have your home ready to go on the market immediately. Make sure you’ve completed all necessary repairs and upgrades. You may also want to consider requesting an extended closing so you have extra time to sell your home.
Additionally, you have the option of using your current home’s equity to help finance the purchase of your new home. When taking this route, buyers usually consider a home equity line of credit (HELOC), a traditional home equity loan, or cash-out refinancing.
While you can’t predict every problem you may encounter along the way, it is crucial to have a game plan when buying and selling a home at the same time. Do you need an experienced expert on your side?
I can help make the buying and selling process easier and more efficient for you! With 13+ years’ experience, I can smoothly guide you through the challenges of these transactions. Contact me today.