Buying your first home will have its ups and downs, but it is nowhere as hectic as trying to buy and sell a home at the same time! We have had several clients in this situation and we wanted to give a helping hand to others who are going through this process. The key to buying and selling a home at the same time is to keep a balance between the two.
The first step for handling this undertaking will be to get pre approved from your lender on what you can afford to buy. Although the next step may be the most important: find a real estate agent who can help you through the buying and selling process. You want an experienced agent who is confident that they can help you.
Your realtor should have dealt with this predicament before and should be able to offer advice and help with how you handle your real estate needs. This can be a stressful time, so you need a realtor that can guide you through the process.
We are going to cover how to buy and sell a home at the same time, in addition to the pros and cons of either buying your new house before selling your home or selling your home before finding your new house.
First Things First
As mentioned previously, the first step is to go to your lender and get pre approved. You need to know what you can afford before you can even consider buying or looking at houses.
One option you can always talk to your lender about is a bridge loan so that you would be able to purchase a new home without your current home being sold first. A bridge loan gives you a short amount of time to own two homes at the same time.
Know your current home’s resale value and equity that you have. These will be huge factors in all of your financials. Understanding what you can afford will help you make decisions throughout the buying and selling process.
You also need to be realistic about the market. Sit down with your realtor and find out what kind of market you are in as this will determine both how you go about pricing your home and making offers on other homes.
The Plan for Selling Your Home
Be realistic about the market and price your home to sell. This way you will get offers quickly and will be able to sell your home for the most money.
Make a plan for what happens if your home sells fast and you haven’t found a new home. Where are you going to live in the interim? Your options include finding a rental home, an apartment, or living with family or friends. Be sure you have a plan that you and everyone involved is comfortable with.
The Plan for Buying a Home
In a hot market it is always best to submit an offer without any contingencies; in other words, don’t make an offer with a contingency that you need to sell your home. Other offers on the table might be more appealing to the sellers.
You need to make sure that you come in with a strong offer if you are in a seller’s market, and this means no contingencies whatsoever. If you are selling and buying a home at the same time, you need to price your home to sell and make strong offers on homes to buy.
Pros of Buying a House Before Selling Your Home
There are benefits to buying your new home before selling your current home. One of these include that you are able to move at your convenience.
Also, if you buy a home before you sell your home, you will be in a position of not having a contingency attached to any offers because you can own two homes at one time. Another benefit is that you only have to move once!
When you buy a new home before you sell your house you won’t have to pay to move your belongings twice and you won’t have to pay for storage units if you have a lot of stuff. If it’s a sellers market, you may not even have to worry about paying to stage your home once you move out.
Cons of Buying a House Before Selling Your Home
The negatives of buying a new home before selling your current home will depend on whether or not you are approved for a bridge loan. If you can’t finance two homes at the same time, you will have to add a contingency to any offers that you will need to sell your house.
So basically you’re having the seller wait on you. Or you could ask for an extended closing, which means the closing process would take longer than they typical 30 days. This means if there are stronger offers on the table you may not get the home.
For what to know during the closing of a home, click here. We have a list put together in this post so that you will understand what happens during the closing process.
Pros of Selling Your Home Before Buying a House
One advantage of selling your current home before buying a new home is that you don’t have to worry about getting your current home sold first. You will also be able to make an offer on your dream home should it become available without the contingency of having to sell your home first. So your offer will be stronger.
It’s preferable to get your home sold first, then close on your next home. This way you aren’t stressed about whether or not your home will sell fast and you can then focus on finding the right home for you. If you have a backup plan for where to live and house your belongings, then you can take your time and find the right home for you.
Cons of Selling Your Home Before Buying a House
Some negatives of selling your current home before buying a home include that you will need to have a backup plan for where you’re going to live and what you are going to do with all of your belongings. You may feel rushed to buy a home if you sell your home first, so alleviate the stress and have a plan for if this happens.
You may also have to pay to move all of your belongings out and then back into your new home when you find it. Storage units can add up, but if you are on the hunt for a new home then your items shouldn’t stay in storage for too long.
Know that selling your home before you find another house is a good thing and it is definitely the preferred way to go about the process. When you have a backup plan in place, you will feel much more comfortable about your options than if you don’t plan in advance.
Time to Get to Work!
Now that you have an idea of everything that’s involved with buying and selling a home at the same time, it’s time for you to make your lists and get a plan together.
Sit down with your realtor and let them know about what you’re approved for by your lender and lay out how you would like the the process to happen. This way your realtor will know what you prefer and they can make a plan on their end to make your real estate needs happen as best as they can.
Things will never go one hundred percent according to plan, but knowing the pros and cons of your situation will help keep you from panicking if and when something doesn’t work out as planned. For more information on what homebuyers need to know, click here.
We also have a post on how to sell your home so your can understand the entire process. Learn more here and read our tips to getting your home sold fast!
