If you’re selling your home, chances are, you also need to find a new one. In an ideal world, you’d be able to move to a new place and sell your current property at the same time without running the risk of taking on a second house payment.
Buying and selling a house takes planning, organization, and timing. If done well, you could find yourself opening the door to your new home in the morning and closing on your old house later that same day.
Unfortunately, you may encounter factors outside of your control that make it harder to buy and sell simultaneously, such as a slow housing market where you’re trying to sell and a hot market where you’re trying to relocate.
Here are five strategies to help you successfully buy and sell a home at the same time – plus, a few options to consider if you end up needing to buy a home before you sell, or sell before you buy.
5 Strategies to help you buy and sell a house at the same time
1. Know the local market for your home and where you’re moving
The local market can often dictate how long it will take to sell or buy a home. When you’re trying to do both at the same time, understanding how your housing market operates is essential so you can set up a realistic plan.
If you’re trying to sell your home in a buyer’s market, for example, it may take longer to sell, since there are more homes available than there are buyers. As a buyer in a buyer’s market, however, you’ll likely be able to find a home quickly with plenty of options to choose from.
Local market factors may influence how you or your agent approach the selling and buying process. For instance, you may need to be more accommodating to potential buyers of your home if you’re selling in a buyer’s market. On the flip side, if you’re moving to a buyer’s market, you may be able to include more contingencies on your offer, such as a clause that makes the closing date contingent on the sale of your current home.
2. Work with a seasoned real estate agent to help you stay on track
When buying and selling simultaneously, your timing for each part of the process becomes critical. An experienced real estate agent can help ensure you’re staying on track with both selling and buying. They understand the local market and know all of the tricks of the trade when it comes to timing the sale of a house. This knowledge and experience can give you an advantage and ensure a smoother process.
An agent can help:
- Guide you toward offer and negotiation strategies to help you buy and sell on your timeline
- Develop a pricing and marketing plan to help you sell your current home quickly
- Negotiate closing dates and contingencies with other parties
- Keep you organized and on top of your paperwork and to-do list
All of these components can make a critical difference when timing the buying and selling of a house, especially when it comes to negotiating closing dates.
Not everyone will be able to close on both homes during the same day. But as long as the closings aren’t too far apart, you can avoid having to pay two mortgage payments or finding a temporary place to live.
3. Know your finances and budget for buying and selling
Buying and selling a home can be a financial juggling act. The last thing you want is to be in the process of selling your home and have your financing fall through on the new house you’re buying.
To help navigate this part of the process, you’ll want to set a budget for buying and selling, know how you’re going to finance your new home, and have a solid plan in place for getting your current home sold.
Here are some steps to ensure your finances are in order before you start to shop for a new home.
- Determine how you’re going to finance your new home and if you’ll need resources other than the profits from your current home sale. You’re likely planning to use the money from the sale of your home to help you pay for your new one. As long as the timing goes well between buying and selling, you can do this. But you may need additional money, especially if you’re buying a larger home or moving to a more expensive location. Decide if you need other resources, such as a mortgage or money from a savings account.
- Set a budget for your new home. Deciding in advance what you’re willing and able to spend (and sticking to it!) can help you determine whether you need additional financial resources to pay for your new home. You can consult an online mortgage calculator that includes current interest rates to get a more accurate picture of your future house payments to help you determine what you can afford.
- Understand your debt-to-income ratio if you plan to borrow money. Assessing your debt-to-income ratio (DTI) will help you determine whether lenders are likely to loan you money. Most lenders prefer a DTI of less than 36 percent.
- Get an estimate of what your house will sell for. Understanding what your home will realistically sell for in your local market will help you determine how much money you’ll have to put towards your new house. Remember, if your current house has a mortgage, you’ll have to pay that off first as part of the sale. An agent can help you determine the right listing price. They also can help you estimate the amount of money you’ll have available to put toward your new home after the sale.
- Get preapproved for your next mortgage. If you know you’ll need a mortgage to help buy your new home, you’ll want to be pre-approved. This lets sellers know you’re serious about buying and makes it less likely for a potential sale to fall through due to financing issues.
4. Prep your current home, so it’s ready to sell when you find your new place
All homes need some work before going on the market. Ideally, you’ll want all fixes completed before you start shopping for a new home or putting your current home on the market. You’ll be in a better position to sell quickly, and at a higher price, if you’re proactive with this step.
When getting your home ready to sell, you’ll want to:
- Declutter and deep clean the inside and outside of your home
- Make home repairs, touch-ups, or updates that give you a return on your investment and add value, such as painting, fixing structural problems, or strategic upgrades such as new sink faucets if that’s something appealing to buyers in your market
- Stage your home so buyers can visualize themselves living there
- Take quality pictures of your interior and exterior that showcases your home to potential buyers
You can consult your real estate agent for information on what fixes are most important to buyers in your current market. Some agents might even offer assistance to help with some of your home improvement costs. For instance, REX’s Home Prep program offers homeowners up to 1 percent of their home’s value to help cover the upfront costs of preparing their home for sale.
5. Have more than one plan in case the timing of buying and selling at the same time is off
Simultaneously buying and selling is possible, but problems can arise.
Therefore, it’s worth taking time before starting the process to identify what you’ll do if you end up needing to sell before finding a new home or moving before you close on your current house. Having a realistic backup plan (or two) will make the whole process of buying and selling less stressful.
To help, we’ve outlined different backup options to help you identify what you can do if you can’t buy and sell at the same time.
What if the timing is off and you can’t sell and buy at the same time?
Buying and selling a home simultaneously involves a lot of different moving parts. If any one part doesn’t go as planned, it can throw off one or both of your transactions.
That’s why you need a clear backup plan (or two) ahead of time. It will make the process less stressful and ensure you’re not scrambling at the last moment to figure out what you’re going to do.
So, whether you buy a home before you sell or sell your house before you buy, here are some things to consider so you have the right backup plan for you.
What to consider if you buy a second home before selling
Sometimes you find your ideal new home before you sell your current home. You may not want to risk losing the new home, so you buy a second home before selling.
An advantage of this situation is that you’ll have a place to move to immediately, so you won’t need to put your belongings in storage. However, this approach can cause you to feel stressed to sell your home quickly if you don’t have enough money to pay two mortgages or enough available assets for your down payment.
Before you decide to buy before selling, you’ll want to make sure you:
- Can financially afford two mortgages
- Know how long you can pay both mortgages
- Can pay the down payment on the new house despite not having sold your current home
If your finances are tight, you won’t want to buy before you sell, no matter how much you love the new home. You don’t want to buy a new home only to lose it because you can’t afford two mortgages.
Options to help you bridge the gap when you buy before selling
You do have options to help you bridge the gap if you buy before selling. To help, determine ahead of time the option that can best help you.
- Obtain a bridge loan. Bridge loans allow you to finance your new home by using the equity you have in your current home. These loans are short-term and offered by some banks. Typically, these types of loans are designed to be repaid within one to three years. This type of loan can help if you’ll have difficulty paying a down payment or two mortgages without selling your home first. However, not all banks offer this service, and it can be hard to qualify. Talk to potential bankers early in the process if you’re considering this option.
- Use your savings to help purchase the new home. If you have enough savings, you can use that to help pay your down payment or your two mortgages until you sell your current home. You can pay yourself back after you sell your home. However, make sure you have enough available assets to cover moving expenses, inspections, and more if you use your savings to cover the gap between buying and selling.
- Purchase with a Home Equity Line of Credit (HELOC). A HELOC lets you access cash based on your home’s value. You’re essentially borrowing against your home’s equity. You can use this option as a second mortgage or a primary mortgage if you own your home. This revolving credit line works similarly to a credit card. You can borrow, repay, and borrow again if needed. However, keep in mind that HELOCs often have adjustable interest rates, meaning your interest rate can change over time. As with a bridge loan, you’ll want to investigate this option early to ensure you’ll qualify. Once you sell your home, you can repay the HELOC.
- Include a sale contingency in your offer to buy. If you’re unable to secure additional funding and can’t use your savings, you can try including a sale contingency in your offer on the home you’re trying to buy. A sale contingency states that your offer to buy depends on you selling your current home. Typically, you’ll provide a specific timeframe of when you’ll sell your home. If your home doesn’t sell during that time, you can back out of your offer without consequences. While this contingency helps you, some sellers will turn down offers with a sale contingency. You’re more likely to be successful with this strategy in a buyer’s market.
- Negotiate an extended closing date. Most closings occur with 30 to 45 days of an offer being accepted. However, if you’re still trying to sell your house and you believe it will sell soon, you can ask for an extended closing date as part of your offer. This can provide you with the additional time you need to sell your home before buying the new one. However, sellers who need to sell quickly may decline your offer. You’re more likely to be successful with this strategy in a buyer’s market.
- Seek a cash offer. If you’ve bought before selling, you’ll want to minimize how long you’re paying two mortgages. Finding a cash buyer can help. Typically, cash-only offers can close faster since the sale won’t depend on whether the buyer’s finances go through. However, the buyer may make an offer that’s lower than your listing price. You’ll need to decide whether it’s worth it to sell for less than another offer that uses financing.
- Look for an iBuyer. Similar to accepting an all-cash offer, using an iBuyer can speed up the sale of your old home. iBuyers are typically real estate companies that buy and sell homes using technology. They often remove the need for a real estate agent since they buy the house directly from you—the homeowner. Unlike house flippers, iBuyer’s aren’t looking for properties that require a lot of work. When working with an iBuyer, you could sell your home within a couple of weeks. This can help if you’re trying to sell quickly to avoid paying two mortgages. That said, you may not sell your home for as much as you would in the open market. But you can save time, avoid having to market or show your home, and more by choosing an iBuyer.
What to consider if you sell your home before buying a new one
Sometimes you may need to sell your home before you’re able to buy a new house.
There are some advantages to having your home sell first. You won’t be faced with having to pay two mortgages. Plus, you’ll know exactly how much equity you’ll have to put toward your new house.
However, this situation can come with some difficulties. Namely, finding a temporary place to live and store your belongings until you can find a new home.
If your situation means you need to sell your home before buying a new one, you’ll want to:
- Have a plan for a temporary place to stay until you can buy a new home
- Make sure you have enough available money to pay for storage if you have a lot of things to move
- Set aside additional money for moving expenses since you may have to move twice—once to put your items in storage and then again to your new home
Options to help you sell before buying
Fortunately, there are some options to help when your home sells fast.
- Ask for a rent-back agreement. A rent-back agreement lets you rent your home from the new owners while you continue looking for a new home. The house sale will still go through as planned, and you won’t have to find a temporary place to live. You’ll have access to the money from your sale, which you can use to pay the rent. However, buyers who need to move in quickly may not accept this arrangement. This option works well in a seller’s market.
- Sign a month-to-month lease on a rental property. If your buyer needs to move in after the closing, you can arrange to live temporarily in a rental property. Ideally, look for a play that offers a month-to-month lease and has enough space for you to store all your belongings.
- Ask if your employer has temporary housing options. If you’re relocating due to a job, you can see if your employer has temporary housing options available to employees. Some companies that frequently need their employees to move have preset arrangements to help them transition into a new location.
You can sell and buy a home at the same with the right plan
When it comes to selling and buying a home, you have options. You can try to do both at the same time, sell before you buy, or buy before you sell.
However, if you’re hoping to buy and sell simultaneously, you’ll want to have a clear plan, plus backup options in case the timing goes awry. Being prepared and knowing your options will help you feel less stressed and more confident throughout the process.
If you’re ready to find your next home, REX can help you through each part of the transaction. You’ll work with a licensed, local real estate agent who will guide you through the buying and selling process from start to closing.
The REX team can also help with fast pre-approvals for a REX Home Loan, provide in-house title and escrow services for a smooth closing experience, and even help with your move.
With REX, you have everything you’ll need to help you buy and sell a home.