If you aren’t working with an experienced agent, selling and purchasing a house at the same time can be challenging in almost any market. It’s not only about logistics and coordination, but they are important factors. It’s also challenging since closing simultaneously requires someone to take a risk, and that someone is usually the seller of your new house.
When it comes to buying and selling a house at the same time, there is no right or wrong technique. Your selections will differ depending on how much money you have and how much risk you’re ready to accept. If you’re relocating from one city to another, it also depends on whether you’re in a buyer’s market, a seller’s market, or both.
Here are a few options for dealing with this scenario.
First Purchase a House
You might want to go ahead and find the home you want to buy first if you can afford both homes at the same time and a lender will qualify you. You must demonstrate that you can afford both residences as part of your qualification to own two properties. You may, for example, show that you have six months’ worth of payments in the bank for both homes.
You’ll need the money for a down payment and closing costs, in addition to demonstrating that you can qualify to own two properties at the same time. You can take out a loan or withdraw funds from a savings account. You won’t have to pay interest if you use cash on hand, but it will decrease your savings dramatically.
You can move in and place your previous house on the market after your new home purchase is finalized. You could rent it out if it doesn’t sell until the market improves.
Early on in the process, talk to one or more lenders to see what house loan choices you qualify for.
Rent Your Home Back After It Sells
You can ask the individuals who are buying your house to rent it back to you for 30 to 60 days after the sale is completed. A rent-back contingency is what it’s called. Obviously, not everyone will agree, but it’s a possibility worth considering. This allows you time to choose and purchase a new home. You wouldn’t have any contingencies on your new house purchase because it’s already sold, which is a bonus. The disadvantage of renting back your property is that you’re on a tight schedule, and even if your acquisition falls through, you’ll still have to relocate.
Everything Should be Timed to Avoid Contingencies
You might be able to postpone the closing of the home you’re selling and write an offer to buy your new house without a contingency to sell once it’s ready to close. When the buyer for your home is fully approved by their lender, you can be reasonably certain that the sale will go through.
If you and your real estate agent are confident that the buyer will complete the purchase of your property, you could postpone the closing to coincide with the closing of your new home. Of course, the customer must be prepared to wait. In this circumstance, you run the risk of being compelled to close on the home you’re buying even if the buyer doesn’t.
Selling First and Buying Second
This is probably the least stressful option because there is less at stake than with the others. Because the sale has concluded, you will know exactly how much money you will receive from the sale of your home. The disadvantage is that you must move out at closing, and since you haven’t purchased a new home yet, you need a place to live as well as a place to store your belongings.
Some people store all of their belongings in a storage unit while staying at a hotel, with friends, or with family. Others will rent a new place on a month-to-month basis for 30 days, giving them flexibility in terms of when they will move. However, regardless of how you look at it, you must move twice with this option.
Buy With a Contingency to Sell
This is the ideal situation for many people. You make an offer on a new property, and the sale of your current property is contingent on finding a buyer. You only have to relocate once, and you won’t have to deal with two mortgages.
Some sellers are willing to wait, but it depends on the seller and the market. A home sale contingency weakens your offer as well. If you compete with a buyer who has no contingencies, the seller is likely to choose the other buyer.
That is why you should work with an experienced realtor to ensure a smooth transition and to assist you in purchasing your dream home while selling your current one for the highest possible price. One of my team’s specialties is relocating homeowners. Please contact me if you have any questions or concerns about how to buy and sell a home at the same time.
Rana Khanjani, MBA
Team Leader – Real Estate Agent in Los Angeles & San Fernando Valley
Providing Services in English, Farsi, and Turkish
Address: 22020 Clarendon St. 200, Woodland Hills, CA 91367