How to Align Selling Your Home and Buying a New One
POSSIBLE SCENARIOS IN SELLING YOUR HOME AND BUYING A NEW ONE
For many who are contemplating selling their house also think about aligning their sale with the purchase of their own new home.Verify your mortgage eligibility (May 31st, 2023)
Not working towards this solution can be costly. Renting or paying a double mortgage for the five-month period before you move into your new home can cost thousands of dollars and a significant fraction of your down payment.
There are several outcomes in buying and selling at the same time.
There's the possibility that you may sell your home first before buying a new one, leaving you scrambling for your own accommodations.Verify your mortgage eligibility (May 31st, 2023)
There's also the chance that you could find a new home before selling, taking on too much in upfront costs and monthly payments. This will leave you with two homes, two mortgage payments, and in likelihood, a double dose of misery.
Then, there's the chance that you could buy and sell your house along the same timeline. This is a difficult feat to accomplish, but entirely possible with proper planning.
BUYING AND SELLING A HOUSE AT THE SAME TIME
You may not get to move into your new home the evening you sell your old one, but you can always reduce the delay between the two.Verify your mortgage eligibility (May 31st, 2023)
The most important place to begin is in the planning stage. Work with your real estate agent to identify what leverage you have and what offers you should accept (or reject).
1. DON’T NEGLECT THE TIMELINES
Real estate negotiations usually revolve around money, so much so that timelines get neglected.
Always remember that a good deal is only one if it falls within your timeline and causes you the least inconvenience. If you ask, your real estate agent should be able to provide you with all the different options on what can be negotiated within an agreement.Verify your mortgage eligibility (May 31st, 2023)
2. WORK WITH AN EXPERIENCED REAL ESTATE AGENT
Your real estate agent matters.
Working with a qualified and experienced agent is half the battle in aligning the sale and purchase process.
Your real estate agent will help you analyze the offers you receive and the options that will cause you the least inconvenience.Verify your mortgage eligibility (May 31st, 2023)
They can also be your representative when it comes to negotiating the best solution for you, so communicate to them what you need to make your timeline work when you start working together.
3. BRING YOUR TEAM TOGETHER
Buying a home is a decidedly complex process; buying and selling at the same time can be overwhelming in terms of logistics and coordination.
There are many cogs in motion during the sale and purchase process, and the closer you bring them together, the better your chances of reducing any misalignments.Verify your mortgage eligibility (May 31st, 2023)
Using the same realtor if you're buying and selling in the same area can go a long way towards reducing your frictions.
WHAT TO DO WHEN BUYING AND SELLING A HOME IN A SELLER OR BUYER'S MARKET
In a buyer’s market, there are more houses for sale than there are people who want to buy them.Verify your mortgage eligibility (May 31st, 2023)
This tips the scales in your favor if you’re buying, but against you if you’re selling. Here are some suggestions if you find yourself in a buyer's market.
1. CONSIDER A LEASEBACK
If you’re buying in a seller's market, you have more leverage and can negotiate deals according to your timeline and convenience.
In a rent-back or leaseback agreement, you can include a clause that enables you to stay in your current home for a specified period. This means you'll pay rent to the buyer. The downside is you'll likely only have 60 days to work with.Verify your mortgage eligibility (May 31st, 2023)
This can help buy you time until you have purchased and closed on your new home.
2. ASK FOR AN EXTENDED CLOSING
Because the odds are in your favor selling in a seller's market, you can negotiate for an extended closing.
Closing timelines usually range from 30-50 days in a typical agreement. In a seller's market, however, you can negotiate for more time.Verify your mortgage eligibility (May 31st, 2023)
3. HAVE YOUR FINANCES IN ORDER
As a buyer in a seller’s market, the competition for homes is higher, and buying a home will be more complicated than selling one.
In this case, have your financing in order in case you find a deal you’re comfortable with. Always be ready to close.
4. MAKE YOUR HOME MARKET READY
If you are a seller in a buyer’s market, it's essential to stage your home and get it showroom-ready to woo serious buyers and increase your chances of selling.Verify your mortgage eligibility (May 31st, 2023)
This gives you as the seller an advantage when you're selling your home, but requires a delicate balancing act to line up your own home to purchase at the same time.
5. CONSIDER A SALE CONTINGENCY
One way to use your leverage as a buyer in a buyer's market is to arrange for a sale contingency.
This is a clause in your agreement that the purchase of that home is based on the sale of your other home.Verify your mortgage eligibility (May 31st, 2023)
6. EXPLORE YOUR OPTIONS
Being a seller in a seller's market gives you more options in terms of which buyer and offer to choose. This will buy you some time as you go through your own buying process, because you can rest easier knowing that your home is in demand.
In other words, don't rush a decision. Take advantage of the seller's market to find an agreement in your favor.
7. CONSIDER A BRIDGE LOAN
As a seller in a buyer's market, selling your home may prove difficult and can hinder the purchase of your new home, especially if you need the money for a down payment.Verify your mortgage eligibility (May 31st, 2023)
If you’re finding it difficult to raise a down payment, consider taking a bridge loan against the equity of your home.
This can help you come up with the cash for your down payment and keep your timelines intact.
FINAL THOUGHTS ON ALIGNING THE SALE OF YOUR HOME WITH BUYING A NEW HOME
Whichever market you’re in, timelines are never guaranteed, and you may end up finding yourself in a situation you wanted to avoid in the first place.
While you can do your best to avoid inconveniences, always have a backup plan in case agreements fall through or circumstances beyond your control arise.Show me today's rates (May 31st, 2023)