9 Tips for
Buying and Selling Your Home at the Same Time
Selling your home when you still need to shop
for a new one can feel daunting to even the most seasoned homeowner––especially
when the demand for new homes keeps rising, but the supply feels like it's
dwindling.¹ You're not alone either if you're already feeling drained by the
complex logistics of trying to sell and buy a new home all at once.
Searching for a new home can be exciting, but
many homebuyers admit that it can also be stressful, especially if you live in
an unpredictable market with plenty of competitors. Unfortunately, waiting out
a competitive housing market isn’t always the best idea either since listings
are expected to remain limited in the most coveted neighborhoods for some
time.²
That doesn't mean, though, that you should
just throw up your hands and give up on moving altogether. In fact, as a
current homeowner, you could be in a better position than most to capitalize on
a seller’s market and make a smooth transition from your old home to a new one.
We can help you prepare for the road ahead and
answer any questions you have about the real estate market. For example, here
are some of the most frequent concerns we hear from clients who are trying to
buy and sell at the same time.
“WHAT WILL I DO IF I SELL MY HOUSE BEFORE I CAN BUY A NEW ONE?”
This is an understandable concern for many
sellers since the competitive real estate market makes it tough to plan ahead
and predict when you'll be able to move into your next home. But chances are,
you will still have plenty of options if you do sell your home quickly. It may
just take some creativity and compromise.
Here are some ideas to make sure you're in the
best possible position when you decide to list your home:
Tip #1: Flex your muscles as a seller.
In a competitive market, buyers may be willing
to make significant concessions in order to get the home they want. In some
cases, a buyer may agree to a rent-back clause that allows the seller to
continue living in the home after closing for a set period of time and
negotiated fee.
This can be a great option for sellers who
need to tap into their home equity for a downpayment or who aren’t logistically
ready to move into their next home. However, many lenders limit the duration of
a rent-back to 60 days, and there are liability issues to consider before
entering into an agreement. A contract and security deposit should be in place
in case of any property damage or unexpected repairs that may be needed during
the rent-back period.³
Tip #2: Open your mind to short-term housing options.
While it can be a hassle to move out of your
old home before you’re ready to move into your new one, it’s a common scenario.
If you’re lucky enough to have family or generous friends who offer to take you
in, that may be ideal. If not, you’ll need to find temporary housing. Check out
furnished apartments, vacation rentals and month-to-month leases. If space is
an issue, consider putting some of your furniture and possessions in storage.
You may even find that a short-term rental
arrangement can offer you an opportunity to get to know your new neighborhood
better—and lead to a more informed decision about your upcoming purchase.
Tip #3: Embrace the idea of selling now and buying later.
Instead of stressing about timing your home
sale and purchase perfectly, consider making a plan to focus on one at a time.
Selling before you’re ready to buy your next home can offer a lot of
advantages.
For one, you’ll have cash on hand from the
sale of your current home. This will put you in a much better position when it
comes to buying your next home. From budgeting to mortgage approval to
submitting a competitive offer, cash is king. And by focusing on one step at a
time, you can alleviate some of the pressure and uncertainty.
“WHAT IF I GET STUCK WITH TWO MORTGAGES AT THE SAME TIME?”
This is one of the most common concerns that
we hear from buyers who are selling a home while shopping for a new one, and
it’s realistic to expect at least some overlap in mortgages. To make sure you
don't get into a situation where you are carrying dual mortgages for longer
than you can afford, examine your budget and calculate the maximum number of
months you can afford to pay both.⁴
If you simply can’t afford to carry both
mortgages at once, then selling before you buy may be your best option. (See
Tip #3 above.) But if you have some flexibility in your budget, it is possible
to manage both a home sale and purchase simultaneously. Here are some steps you
can take to help streamline the process:
Tip #4: As you get ready to sell, simplify.
You can condense your sales timeline if you
only focus on the home renovations and tasks that matter most for selling your
home quickly. For example, clean and declutter all of your common areas,
refresh your outdoor paint and curb appeal, and fix any outstanding maintenance
issues as quickly as possible.
But don't drain unnecessary time and money
into pricey renovations and major home projects that could quickly bog you down
for an unpredictable amount of time. We can advise you on the repairs and
upgrades that are worth your time and investment.
Tip #5: Prep your paperwork.
You'll also save valuable time by filing as
much paperwork as possible early in the process. For example, if you know
you'll need a mortgage to buy your next home, get pre-approved right away so
that you can shorten the amount of time it takes to process your loan.
Similarly, set your home sale up for a fast
and smooth transition by pulling together any relevant documentation about your
current home, including appliance warranties, renovation permits, and repair
records. That way, you're ready to provide quick answers to buyers' questions
should they arise.
Tip #6: Ask us about other contingencies that can be included in your contracts.
Part of our job as agents is to negotiate on
your behalf and help you win favorable terms. For example, it’s possible to add
a contingency to your purchase offer that lets you cancel the contract if you
haven't sold your previous home.
This tactic could backfire, though, if you're
competing with other buyers. We can discuss the pros and cons of these types of
tactics and what’s realistic given the current market dynamics.
“WHAT IF I MESS UP MY TIMING OR BURN OUT FROM ALL THE STRESS?”
When you're in the pressure cooker of a home
sale or have been shopping for a home for a while in a competitive market, it's
easy to get carried away by stress and emotions. To make sure you're in the
right headspace for your homebuying and selling journey, take the time to slow
down, breathe and delegate as much as possible. In addition:
Tip #7: Relax and accept that compromise is inevitable
Rather than worry about
getting every detail right with your housing search and home sale, trust that
things will work out eventually––even if it doesn't look like your Plan A or
even your Plan B or Plan C. Perfecting every detail with your home decor or
timing your home sale perfectly isn't necessary for a successful home sale and
compromise will almost always be necessary. Luckily, if you've got a good team
of professionals, you can relax knowing that others have your back and are
monitoring the details behind the scenes.
Tip #8: Don't worry too much if your path is straying from convention
Remember that rules-of-thumb and home-buying
trends are just that: they are estimates, not facts. So if your home search or
sale isn't going exactly like your neighbor’s, it doesn't mean that you are
doomed to fail.
It's possible, for example, that seasonality
trends may affect sales in your neighborhood. So a delayed sale in the summer
or fall could affect your journey––but not necessarily. According to the
National Association of Realtors, the housing market tends to be more
competitive during the summer and less competitive during the winter.⁵ But it's
not a hard and fast rule, and every real estate transaction is different.
That's why it's important to talk to a local agent about your specific
situation.
Tip #9: Enlist help
early.
Which leads us to our final tip: If possible,
call us early in the process. We'll not only provide you with key guidance on what you should do ahead
of time to prepare your current home for sale, we'll also help you narrow down
your list of must-haves and wants for your next one. That way, you'll be
prepared to act quickly and confidently when it’s time to list your house or
make an offer on a new one.
It's our job to guide you and advocate on your
behalf. So don't be afraid to lean on us throughout the process. We’re here to
ease your burden and make your move as seamless and stress-free as possible.
BOTTOMLINE: COLLABORATE WITH A REAL ESTATE PROFESSIONAL TO GET TAILORED ADVICE
THAT WORKS FOR YOU
Buying and selling a home at the same time is
challenging. But it doesn't have to be a nightmare, and it can even be fun. The
key is to educate yourself about the market and prepare yourself for multiple
scenarios. One of the best and easiest ways to do so is to partner with a
knowledgeable and trustworthy agent.
A good agent will not only help you evaluate
your situation, we will also provide you with honest and individually tailored
advice that addresses your unique needs and challenges. Depending on your
circumstances, now may be a great time to sell your home and buy a new one. But
a thorough assessment may instead show you that you're better off pausing your
search for a while longer.
Contact us for a free consultation so that we
can help you review your options and decide the best way forward.
Sources:
1. Board of Governors of the
Federal Reserve System, FEDS Notes - https://www.federalreserve.gov/econres/notes/feds-notes/housing-market-tightness-during-covid-19-increased-demand-or-reduced-supply-20210708.htm
2. Federal Reserve Bank of St.
Louis, FRED Economic Data - https://fred.stlouisfed.org/series/MSPUS
3. Realtor.com - https://www.realtor.com/advice/sell/what-is-a-rent-back-agreement/
4. Bankrate.com - https://www.bankrate.com/real-estate/sell-your-house-while-buying-another/
5. National Association of
REALTORS - https://www.nar.realtor/blogs/economists-outlook/seasonality-in-the-housing-market
