Trying to juggle buying and selling a home all at once can be quite a challenge. There are so many things to coordinate and decide on, from whether or not to take out loans to hiring custom home builders to build a house instead of purchasing a pre-owned one. It can be incredibly stressful, but buying and selling a home at the same time can make the whole moving process quicker and save you money. Here are things you should consider when buying and selling a home at the same time to help make things easier.
Assess Both Markets
When you’re buying and selling a home at the same time, it’s a good idea to have an understanding of both markets. Ideally, you’ll want to be in a seller’s market for your old home and a buyer’s market for your new one. Therefore, it’s a good idea to meet with your real estate agent early on to evaluate how much your current home is worth before you put it on the market. Your real estate agent will know the market well enough to be able to tell you what the going price may be and things you can do to fetch an even better price.
You’ll also want to do the same for the market where you plan to purchase your new home. Determine your needs and priorities to help you understand what you can afford. You’ll need to know this information in order to be able to figure out how financing loans will work during the buying and selling process. Many people are unable to afford purchasing a new home before selling their old one, so knowing your numbers for both markets will help you plan more appropriately.
Should You Buy Or Sell First?
Answering this question can get as complex as answering the question, “Which came first: the chicken or the egg?” If you sell first, you may not get enough cash for your home to buy the one you have your heart set on. If you buy first, you may end up stuck paying two mortgages for a period of time. You may want to consider floating your house off the market at first to get a feel for how it might sell later on and see fast how houses you’re looking to buy come off the market. This can help you determine if you might have additional issues you may need to address when it’s time to sell.
Carefully consider each option and figure out how it may affect your unique situation. Do you have family or friends that you can stay with for a short period of time? This may help you cope with a lag between closing days and avoid having to spend money on temporary housing. You’d also be able to buy a house first and eliminate the need to juggle two separate mortgages. Talk with a real estate agent and see what available resources may be available to help you deal with these kinds of scenarios.
Make A Detailed Plan
Once you have all your numbers nailed down, you can come up with a plan for your home buying and selling process. This plan will highly depend on a number of conditions. For example, demanding a contingency that your current home sells before you buy another one most likely won’t work in a competitive market. If you’re selling in a competitive market, you may be able to negotiate a longer escrow with the buyer to give you more time to purchase. Coming up with solutions that may impact your buying and selling process will help you to make better decisions as you move through the process.
There are a couple of conditions that can help you manage and navigate buying and selling a home at the same time. You can offer an extended settlement period to the buyer of your home to achieve a simultaneous settlement. This period can be for about three or four months, which gives you plenty of time to find a new home. If you’re unable to close on your new home before you sell your old one, you may want to consider including a rent-back provision that allows you to stay in your home for up to 90 days. You’ll be required to pay rent after you sell and that amount will be determined by the buyers based on the local market rents or the mortgage payment.
Now that you have a plan in place, it’s time to consult with a local mortgage broker or lender. It’s a good idea to compare the rates and terms from at least three different lenders. You’ll need to be able to understand what kind of down payment you’ll be expected to make, given the type of home you’re planning to buy and its total price. Do you have any equity available in your current home and will your lender allow you to make a home purchase before you sell your current one? Are you planning to build a new home instead of buying and need a way to pay custom home builders?
As far as loans are concerned, one popular option is a bridge loan. This short term loan lasts for no more than six months and can be attractive for both buying and selling at the same time without contingencies or restrictions. Home equity line of credit loans may also help you borrow the money you need. To better your chances of getting pre-approval for loans, keep your financial situation the same until you close on a new house.
This isn’t a good time to apply for new credit cards, make any large purchases, or close any existing accounts you have. Keep your balances below 30% of your credit limits. Also, make sure to be on time with your payments for monthly bills each and every month. Get a copy of your credit report and pay down as much debt as possible if you can before you try to meet with lenders. The more you can improve your credit score, the more likely you’ll be able to get the loans you need.
Prepare Your Home To Sell
There are certain things you will need to do to prepare your home to sell on the real estate market. One of the first things you’ll want to consider is hiring a home inspector. The inspector can help you uncover any potential issues that need to get fixed that may prevent you from selling your home, such as electrical repairs. You’ll also want to stage your home to make it more inviting to buyers. You should approach selling your house like one of the 32.5 businesses in the United States and treat it like an asset you’re trying to get the most cash for.
Get rid of clutter, rearrange furniture, and do as much deep cleaning as you can. Consider applying a fresh coat of paint to each room and adding flowers to brighten them up. Don’t forget to spruce up the outside of your home with some residential landscaping. Call several local companies in your area and find out how much a tree cutting cost will be. Have your roofing looked at by a professional to see if any repairs will need to be made.
Another thing you’ll want to consider when preparing your home for sale is depersonalizing the space. Remove family photographs and any collector items you have around your home. You want to try to create as much of a blank slate as possible so potential buyers can imagine their personal items taking up space. When your house is being shown, it’s a good idea if you and your pets aren’t there.
Make Necessary Repairs
Before you start showing your home, make sure to take care of necessary repairs. You may need to hire a general contractor for things like broken window repair. Other common home repairs include things like water damage and defects in the home’s heating and cooling systems.
You may want to consider construction loans to help you cover these costs. You may be able to even roll some of these expenses into the loans for your mortgage. There are even federal loans that you may qualify for if you can qualify for conventional loans. Focus your repairs on the items that the home inspector uncovered when they did their inspection. Once these are done, you can choose to do more renovation projects if you choose and your budget will allow.
Before hiring a contractor, be sure to get several detailed estimates from various local companies. Ask to see proof of licensing and get all work in writing before signing any agreements. It’s also a good idea to get references from past clients and see examples of their work.
Before you begin any repairs, go through each room and make note of things that should be fixed. Look for holes that need to be patched and chips in flooring. Make sure your appliances are properly working and faucets and fixtures are free from leaks. Look for damage around windows and doors. Try to figure out what items you can take care of on your own and what things you’ll probably need a professional to handle.
Interview Potential Real Estate Agents
You may want to hold off finding a real estate agent until you’ve completed all your home improvements projects and readied your house as much as possible for sale. When looking for a quality real estate agent, ask family and friends for recommendations, and read online reviews of agents in your area. Visit the Better Business Bureau website and see if there are any customer complaints. Check out the realtor’s website and investigate what licenses and certifications they have.
It’s a good idea to interview several real estate agents before settling on one. Ask them what they think the current market is like and how long homes like yours typically sit on the market. You can also ask them how they would highlight your home and get recommendations on what changes to make to improve your home’s value.
Schedule A Professional Home Photo Shoot
Many buyers search for homes online. It’s important that you have great photos of your home to help it visually stand out and make people want to buy it. You may want to consider scheduling a professional photoshoot of your home to give it a fantastic first impression. Make sure your home is photographed during the day using a wide-angle lens with as much natural light as possible. You may also want to consider video tours or 360-degree views as well.
Make sure that you have adequate enough homeowners insurance to cover both homes until all transactions are complete. This will help protect you from any issue that may arise with contractors or other visitors, such as falls, theft, and accidental damages. Shop around and compare rates for several different insurance policies. Make sure you look closely at what these policies cover and what you may have to pay for out-of-pocket. You may have to pay for additional coverage if either home is in a location that’s prone to flooding.
Trying to buy and sell a home at the same time can be quite a bit for one person to take on at once. However, you can manage if you take your time to develop a sound strategy to help guide you through the process. Things may not always go as planned, such as not qualifying for needed loans or experiencing delays because home improvements aren’t going as fast as expected.
Yet, you can still find a way to make it through and enjoy the new home you’ve been dreaming of. Take your time and do your due diligence before making any important decisions. The more educated you can get regarding the real estate process, the less stress you’ll feel. You’ll also have more confidence knowing you’ve made great decisions every step of the way.