For anyone who has sold a home, you know it’s a multi-step process. But when you’re looking to simultaneously buy a house as you sell your home, you’re dealing with an even more involved process that will require above all things proper planning.
The goal for those simultaneously buying and selling is to avoid having to pay the existing mortgage on a current home and a new mortgage on the one you just bought. The result could be having loan payments and the cost to maintain both properties. There’s also the risk of selling a home before buying and not having a place to go to after the close of the sale.
While these scenarios are unpleasant, there’s also the likelihood that with proper planning, the right financing, and strategic pricing and negotiating, you can time the sale of your home and the purchase of a new one can be as near seamless as possible. Here is a helpful guide to creating a process that works for you.
Assess the market
The best case scenario when looking to buy and sell simultaneously is moving from a seller’s market to a city enjoying a buyer’s market that will lend to you receiving the highest selling price on your home, with the lowest buying price on your new home. The reality, however, is that there are various factors that impact the housing market.
Areas with great schools, for instance, will likely always be a seller’s market, while a rural or more remote community may be a buyer's market. Knowing the market will be a valuable tool when looking to time the sale and purchase, and will also be a way to narrow down where you’d like to live.
Knowing what to expect will also help prevent surprises down the road that may hinder the way you’re timing each process. By assessing the market, many of the variables you’ll need to consider will help facilitate the planning process and offers the best way to effectively strategize a timeline to work for you.
Preparing is key
As you start the process of selling your home, the first step should involve working with an experienced listing agent to guide you and prepare your home for listing. Part of this process is offering insight on the types of repairs needed, as well as suggesting decluttering and cleaning your home. Once you’ve been able to do this, your Realtor will move forward with photographs and videos and have these ready when the home is ready for the market.
As you plan to buy, a top priority is ensuring your finances are in order. Lending guidelines change nearly daily, especially in a hot market, and it’s important to have the cash to buy or have preapproval for a mortgage without any conditions from the lender that your existing home should sell first. Ensure all this is in order ahead of beginning your house hunting endeavors.
Pay attention to the finances
Most sellers will likely use the proceeds from the sale of their home to pay off the mortgage to then apply the remaining finances to the new house. However, until the sale closes, you’ll need to determine what funds to use toward a down payment and have your financing in order to buy your next home.
While some homeowners are able to dip into their savings accounts for their down payment, not everyone can do so. Some of the options available for homeowners to consider when coming up with a down payment include:
Start looking for your new home
If your plans of buying a home involve moving within the same city, you are able to work with the same real estate agent to simultaneously buy and sell. If you’re looking to move to a new area, a new real estate agent with local market knowledge will help you settle in.
For those looking to buy a new house in a seller’s market, you may find you won’t be able to see some of the homes in person ahead of making an offer. While it may not sound ideal to buy a house without first seeing it, your Realtor will help you through this process and identify logistics if needed.
Your agent will help you if you’re looking to buy a specific kind of house within a particular neighborhood. Or if you’re looking to identify the best schools, or want to live nearby to a community’s amenities including parks and outdoor recreation. It’s important to identify must-haves as you begin house hunting in order to avoid wasting precious time especially if you’re looking to buy and sell at the same time.
Timing is important
We’ve discussed the importance of having your financing in order, and your real estate agent can help you time the sale and purchase just right. One of the best ways to do this is to negotiate the closing dates to work best for you.
If a purchase closes a few days off from the time the sale closes, you may consider a short-term arrangement including staying with friends, family, or at a hotel. However, if you anticipate not having a place to stay for a longer period of time, consider negotiating a “rent-back” agreement with the buyer.
Generally, these agreements extend for up to 60 days but most often are only used for a few days to give sellers a degree of flexibility. In this highly competitive market, it’s not unheard of for some buyers to let the seller stay without charge.
Interested in exploring the Houston real estate market? Contact Natasha Valasek at (832) 860-3064 or email [email protected].
