Buying or selling a home is a big adventure; some thrill seekers may choose to take on both tasks at the same time. If you're finding yourself in the position of needing to buy and sell at the same time, here are some tips to help you navigate the possibly challenging course ahead of you.
Evaluate Your Local Market
For most buyers and sellers, selling their current home before putting an offer on another property is their best real estate option. But for others, it really depends on the local real estate market. If you're thinking of selling and buying at the same time, research the market in your target area. This can help you gauge whether it's a buyer or seller market. If many properties are available, it might be a good time to list. If inventory is low, you may need to wait until the market picks up again.
The general rule of thumb is to sell first in a buyer's market and buy first in a seller's market; but this isn't always the case since every experience is unique. You can really get an understanding of what might work best for you by talking to your trusted real estate agent; they will know the market and will be able to provide insight into current trends.
Understand Your Finances
When it comes to buying or selling a house, finances are a huge part of both transactions. Whether you are looking to sell or looking to buy, knowing your current financial situation is vital to your next steps.
If you have a mortgage loan, you will absolutely want to know how much equity you have in your home. The equity that has built up could be enough for a down payment on another home. It's important to remember, though, that any equity is only accessible after closing unless you use a home equity line of credit (HELOC) or a second mortgage to cash out.
If you currently own, consider having an inspection done to understand what repairs or work may need to be done to the property to help you understand how much you may need to deduct from the possible sale price or any concessions you may need to make for a future buyer.
Utilize A Contingency
Ideally, you would sell your home on the same day as buying a new one. Since this is not the case for most buyers/sellers, adding a contingency into the contract can be helpful. In a real estate transaction, a contingency refers to a provision for a possible event or circumstance when it comes to the financial ability to close a purchase sale.
If you want to buy before selling, make an offer contingent on the sale of your home, which means you will buy the new home once your current residence sells. You can also request an extended closing (if you are certain your home will sell), which extends your closing past the typical standard of 30-45 days.
If you want to sell before buying, you can make an offer with a settlement contingency. This contingency works when you have an offer on your home, and you want to buy another which means you will buy the home contingent on the sale of your existing home.
If you happen to sell and haven't made an offer on another home, you may be able to negotiate a rent-back, which means you go through with the sale of your home, but you rent the home back from the new owners for a specific time (anywhere from 60-90 days), giving you time to find a new home or make other living arrangements.
In low inventory markets, sellers are reluctant to accept contingencies because there are more buyers than properties for sale. Competing in this kind of market, some buyers resist adding a contingency on the sale of a home.
Buying and selling are big events - if you are unsure of where to start or if you should do both at the same time, it is best to ask for help. Ensure your finances are up-to-date and have a reasonable idea of what you can get for your home. If you must search for another home while selling, have a backup plan if you can't find another home in time. Your real estate professional can provide insight into the market and what other buyers and sellers have encountered.
