Tips for buying and selling a home at the same time.
Know the market
Start by determining if you’re in a buyer’s market or a seller’s market. This information can help you and your real estate agent come up with the best pricing strategy. For instance, if you’re in a seller’s market, your current home may sell quickly, but you may face competition from other buyers for your dream home. On the flip side, if you’re in a buyer’s market, you may find a great deal on a new home while your current one remains on the market longer than expected.
To help simplify the process, consider hiring the same real estate agent for both your current home listing and your new home purchase. Have your agent research a fair selling price for your current home, as well as prices in the area where you’re looking to buy.
Plan and prepare
Certain factors, like knowing how quickly your house will sell, how much it will sell for or how soon you’ll find your next home, are largely out of your control. By focusing on areas you can control, you’ll minimize stress and be as prepared as possible. For instance, don’t wait until the last minute to take care of home repair projects or add more curb appeal, such as touch-up painting, landscaping, or repairing broken screens or fence posts.
Other steps you can take now to help the process go smoothly include:
- Have your home appraised to give you an idea of what it may sell for
- Determine how much of a down payment you can afford to put on your new home
- Get preapproved for your new home loan
- Keep your credit score strong
- Maintain an ample emergency fund for any unexpected costs along the way
Buying or selling first: pros and cons
If you’re house hunting while your current home is on the market, it’s hard to predict which closing will happen first. Understanding the potential consequences can help you develop a strategy if your current property sells before you buy a new one, or vice versa.
If you sell first: You’ll likely have an easier time getting a mortgage for your new home. But depending upon the timing, you could find yourself without a place to live.
- Tip: Request a rent-back agreement. This lets you remain in your current home for up to 90 days, giving you additional time to house hunt. Generally the rent-back works by either lowering your selling price or paying rent to your new buyer.
If you buy first: The good news is that you’ll have plenty of time to move. The potential downside is that you could find yourself with two mortgages.
- Tip: Consider a bridge loan. It’s a short-term loan that uses your current home’s equity to pay for your new home. The loan is repaid when you sell your current property. Another option is to include a contingency clause in your contract that states your new home purchase is contingent on the sale of your current home.
Home, sweet home
Buying a new home while selling your current one can be tricky. By planning ahead as much as possible and staying informed of all your options, you can get the job done successfully and with minimal stress. If you’d like to learn more about home financing options, contact one of our mortgage bankers for assistance.