Buying and selling a home at the same time is not easy – but it can be done with a little bit of luck combined with exceptional timing. Many families must make an immediate transition from the home they are selling right into the home they are buying. They don’t have the luxury of storing their belongings and waiting to purchase their next residence.
There’s no way to make the process of buying or selling a home totally predictable, but thinking through your preferred strategy will help you navigate the ups and downs a little bit more easily. While you can’t control the market, you can plan ahead to minimize the impact of any potential challenges that may arise.
Below we will explore the correct steps to follow to sell your current home and buy another home. Although these are not foolproof, they will help you successfully sell and buy a home at the same time.
1. Start Your Home Search First
You’ll want to start your home search by searching the homes for sale in your area. You need to get a feel for the market whether you are simply moving across town or heading across the country. This is especially true if you are selling in one market but moving to another. The length of time to buy and sell can often vary and is impacted by the current local real estate situation. A qualified real estate agent can help strategize based on local market conditions.
Is the market a buyer’s market? A buyer’s market means there is an abundance of homes available for sale. Without a doubt, you will have a much easier time finding your dream house if there is a wide inventory. However, a buyer’s market makes it harder to sell your current house. In a buyer’s market, sellers are often more willing to accept a contingent offer.
Is the market a seller’s market? In a seller’s market, there are more buyers than sellers. You will have a lot more success selling your home in a seller’s market but might have a more difficult time finding a new home to move into. Sometimes you can request a rent-back from your buyers after closing so you can have enough time to find your new home if it is a seller’s market.
Here are a few tips to remember depending if the situation is a buyer’s market or a seller’s market:
- Make an offer with a sale contingency in a buyer’s market
- Ask for an extended closing in a buyer’s market
- Draft an offer that has a settlement contingency in a seller’s market
- Request a rent-back agreement in a seller’s market
2. List Your House for Sale
Here is a brief outline of the steps needed to list your house to obtain a quick sale.
- Interview Real Estate Agents – It’s time to find a pro you can trust. Ideally you want to look for experience while also finding someone you like. Examine their performance record of getting homes sold. Is it impressive? Remember to ask plenty of questions so you have a good idea of how many homes the agent has sold in your area in the last year. An impressive agent should close between 30 and 40 transactions every 12 months.
- Hire a Home Inspector – Get a jump on fixing things in your home that might slow down the buying process. With your own home inspector you can uncover problems and take care of them before the buyer’s inspector finds the problems. Basically, hiring your own home inspector and undertaking the needed repairs is a great way to speed things up.
- Stage Your Home – Staging (creating a move-in ready product) is a great way to move a house quickly in today’s real estate market. It creates a warm and vibrant atmosphere that appeals to a buyer. Also you should hire a professional cleaning service to make sure everything is spic and span and smells fantastic. Do not overlook the home’s curb appeal. Remember, seeing your house from the street is the first way to interest a buyer. You want well landscaped grounds. Once things look good inside and out it’s time for professional photographs.
- Pricing the Home – It is imperative that you price the home right. Your real estate agent will run a comparative market analysis so you can get an idea of the price point for homes in your area.
Once the above checklist has been worked out then it’s time to list your house on the MLS (Multiple Listing Service). Hopefully, you’ll have an offer quickly so you can move on to buying your next house.
3. Negotiate a Deal with Strong Buyers
Many home sellers think they can breathe a sigh of relief when they have an offer on their home, but this is when the hard part starts: negotiations. Chances are good that when you look at the offer you will not feel satisfied. It is rare for any offer to have everything you want and be perfect. It is time to negotiate with the buyers so you can get what you need and want. Negotiations consist of counteroffers. If you are not satisfied with the offer, then it’s time to counteroffer.
Don’t be surprised if you have a contingency offer. Ideally, the offer should have a few contingency clauses. Below is a list of common contingencies that might be in an offer:
- Contingent Sale – Sometimes a buyer will want to purchase your home contingent on the sale of their home (which might be what you’re hoping to do, too). This is always considered a weak offer because it’s complicated, especially if you plan on quickly selling your home and buying another. You’ll want to try and avoid a contingent sale, especially if it’s a seller’s market.
- Financing – The buyer will only buy your home if they can get financing. If the buyer has a preapproval from a mortgage lender then this should not be a deal breaker.
- Timing – They will only buy your home if they can move in at a certain time. This might be a problem if you plan on working a rent-back into the contract.
- Inspections and Disclosures – The buyer must approve of your disclosures and the results of their home inspection.
You will either accept the offer, reject it, or reject it plus counter with your own counteroffer. Ideally, you should never reject an offer without making your own counteroffer. Remember, in real estate, everything is open to negotiations.
As discussed, a rent-back contingency is a great option when selling and buying at the same time. You will ask the buyer of your home to allow you to rent back the house for 30 to 60 days after the close date. Remember, not every buyer is going to agree to this but it’s an option that many take when buying and selling at the same time.
4. Make an Offer on a New Home
Have you found the perfect house? Then it’s time to make an offer on the new home. You’ll want to sit down with your real estate agent to draft the offer. Hopefully, you have been pre-approved by a mortgage lender which will make your offer stronger. You’ll need to determine your down payment (whether it comes from savings, the sale of your house, or a home equity line of credit).
5. Get Through Escrow and Closing on Both
The escrow and closing process can be stressful time. Depending on timing, you might be able to make an offer on your new home quickly if the house you are selling is about ready to close. This will eliminate the need for a contingency. Usually, when the buyer of the house you are selling has full approval from the lender then you can feel confident that the sale will finalize. In such a situation you could delay the close of your current home so that it coincides with the close of your new home. However, you’ll need a buyer who is willing to agree to this situation.
How to Reduce Your Risk
It’s hard to foresee everything when buying and selling at the same time. Even in the best of circumstances, it will be fraught with unknown variables. However, there are ways you can reduce your risk. Below are just a few tips on selling and buying at the same time.
- Never assume it’s all going to go smoothly. Instead, prepare for the unknown (as best you can) so you are ready for surprises.
- Have an emergency fund available in case you need a hotel or short term rental.
- Have your down payment ready.
- Keep copies of everything and stay organized.
- Consider a rent-back to provide you with time, and also be sure that funds are available if your new home closing is taking place at a later time.
- Keep everyone on the same page. When you are buying and selling at the same time a lot of people are involved in the process. You must consider the buyers, sellers, and realtors involved in both transactions. You’ll want to communicate with each other, so everyone stays on the same page.
Mistakes to Avoid when Buying and Selling at the Same Time
1. Dragging Your Feet to Prep Your Home for Selling
Does your house need work before you sell it? Be honest with yourself about it. Maybe it needs repainting, new carpets, or a deck repair. Simple tasks like new grout in the bathroom can make all the difference when selling a home. Ideally, you should decide the tasks before you even start the process of selling your home and buying another house.
Unfortunately, some people underestimate how long it takes to prep a house for sale. You should always give yourself plenty of time to get everything done.
2. Not Having a Backup Plan
Buying and selling a home at the same time takes coordination on all fronts. In fact, lots of roadblocks can occur that delay or change things. Therefore, it is important that you have a solid backup plan in place and adequate funds to sustain you, especially if you need to find a short-term rental.
3. Overextending Yourself
Overextending yourself by buying too much or failing to get pre-approved on financing can happen to anyone. That’s why a pre-approval is so important; it gives you an idea of how much house you can realistically afford. Many people mistakenly believe that they can afford more houses than they can realistically get financing for.
4. Not Negotiating Correctly
Negotiations matter. You’ll want to be upfront with the sellers and the buyers. If you’re making an offer, make sure you have a contingency plan to protect yourself. Always give yourself a cushion when selling your existing home. You might have to take a lower offer. Many people want to use their entire sales price as a down payment on another home, but if that’s your plan then you should plan to have less money than expected.
5. Using Multiple Agents
You do not want to use multiple agents to list and buy your new house. It’s best to use the same skilled agent for both transactions. This will make the closings easier and more attainable. Only if you are moving out of state or if the agent is working exclusively with buyers or sellers should you rule them out.
A single skilled agent can make the difference in any real estate deal. Selling and closing on a house at the same time is a process that requires experience so having a knowledgeable Realtor to work alongside can be the difference between success or failure. Do your research and don’t be afraid to interview several Realtors before making your decision.
6. Closing on a Friday or at the End of a Month
Working closely with an agent you’ll be able to determine when is the best time to close on your current home and then you can close on your new residence. The best-case scenario is the same day but 2 to 3 days later is acceptable. Also, avoid closing on a Friday as it can take days for the money to reach your account.
Remember, banks usually cease wire transfers by 3 pm so closing in the morning hours will give time for money to reach your account. Another thing to avoid is closing at the end of the month because banks and title/escrow companies often become backed up at the end of the month which can cause delays on your closing.
The above strategies for selling and buying a house at the same time can help you make the complicated process easier and less stressful. Just remember that despite the best-laid plans sometimes stumbling blocks occur, but you should be able to maneuver around them and continue moving forward to attain your goal.