Things can get complicated when you’re trying to sell your house and buy your next place at the same time. The process of buying and selling simultaneously can be stressful, particularly if you need the money from the sale of your current home to put toward your new one.
In a perfect world, your next house would be ready and waiting as soon as you turn over the keys to your previous one. But of course, the world is not perfect, and the timing between selling one and buying the next does not always line up the way you want it to. Take heart, though, because a little planning and working with a savvy real estate agent can help make both transactions run more smoothly.
Here are five key topics to consider, with handy tips to manage the process — and keep your sanity intact.
- Partners: Assemble a team of pros
- Money: Consider your financial position
- Market: Does it favor buyers or sellers?
- Timing: Negotiate the timeline, not just the money
- Safety net: Have a backup plan
1. Partners: Assemble a team of pros
Given all the steps and paperwork involved in selling and buying a home at the same time, you’ll want seasoned professionals guiding you through the process. Hiring a skilled real estate agent can give you a realistic estimate of home prices in your area and how to price your current home. Using that figure, you can calculate how much equity you have and what your net proceeds will look like, so you can apply that money toward the down payment and closing costs of your new home.
“Working with a really experienced Realtor makes a huge difference,” says William Fastow, an associate broker with TTR Sotheby’s International Realty in Washington, D.C. “There are a lot of moving pieces, so you want to work with someone who has a proven track record in your market and experience across both buying and selling.”
Using the same real estate agent and real estate attorney (if required in your state) for both the sale and the new purchase can make the entire process go more smoothly.
2. Money: Consider your financial position
Ideally, you’d be able to have concurrent closings, selling your home in the morning and closing on your next place that afternoon — or at least within a few days. But what if things don’t go according to plan? You could suddenly find yourself without the necessary funds to close on your new home, or wind up paying two mortgages for an extended period of time. Worst-case scenario, you may be unable to get final approval for a mortgage and potentially lose your next home.
If you don’t have the means to handle two mortgages simultaneously, you might want to include a contingency in your offer that gives you an escape route should the sale of your current home fall through. You may also consider adding a financing contingency, in case your new loan approval hinges on selling your current home. A good Realtor will be able to help you make the right decisions for your needs.
3. Market: Does it favor buyers or sellers?
When trying to buy and sell a home simultaneously, a lot depends on the conditions of your local housing market.
In a seller’s market
In a market like today’s, with buyers competing for record-low inventory, sellers have the upper hand. But even in a seller’s market, if you want to bring in top dollar, you’ll need to make your home market-ready. This type of market means you can also be more selective about which offers to consider and limit your options to those with fewer contingencies. If the property is priced right and staged well, it will likely sell quickly. So make sure you’re ready to move fast on buying your next place.
In a buyer’s market
On the other hand, it could take much longer to sell your home when buyers are in the driver’s seat. In a buyer’s market, you may want to hold off on making an offer on your next place until you’ve gone into contract with a solid buyer for your current place. You may also want to include a contingency that voids the deal if the sale of your current home doesn’t go through, for peace of mind.
4. Timing: Negotiate the timeline, not just the money
Of course you want to get the best possible price on the sale of your home, and not to overpay for the next one. But consider the timing of the closing process as well when negotiating both deals. The goal is to get both the buyer of your current home and the seller of your next home to agree to adjacent closings or any necessary contingencies.
“When I put out an offer for a client, I’m making it clear that we need to close on that date,” says Mark Pires, a Realtor with Berkshire Hathaway HomeServices in New Canaan, Connecticut. “If that date doesn’t work, we may have to find another opportunity. Making sure you can close on the same date is a huge part of negotiating our terms.”
5. Safety net: Have a backup plan
No matter how carefully you plan your transactions, surprises can occur. They might not happen on schedule — or might fall through completely. If you have contingencies in your contract, you should be able to reschedule the closings accordingly or walk away with minimal financial pain.
But it’s smart to have a backup plan just in case. Here are some options:
- If you sell your current home but haven’t found your next place yet, you’ll need to find a short-term rental. Be sure to factor in the added expense of renting a storage unit if all your belongings won’t fit into a rental.
- Or you could consider asking your buyers to do a rent-back agreement, which would allow you to remain in your current home after closing for a short time and pay rent to the new owners until you can move.
- If you close on your new place without selling the old one first, you’ll have two mortgages to pay. To cover the costs until you’re able to sell, consider a home equity line of credit or a bridge loan over the short-term. (If you do use a bridge loan, you’ll be responsible for making payments on it regardless of whether or when your house sells.)
- Or you might try renting out your home and using the income to help offset the expense of the new place until you can sell it.
Trying to sell your house and find a new place at the same time can be quite a challenge. Working with an experienced real estate agent can help ease the transition and ensure consistent communication with everyone involved. Finally, make sure you keep close tabs on your finances and credit, both before and during the process. You want to be able to act quickly when you find your next home.