Selling your home or buying a new one is an emotional – and inherently stressful – process. And when you’re buying and selling at the same time? Those stress levels grow geometrically. Fortunately, the assistance of a trusted guide, like a talented real estate agent, can help alleviate some of the hassles and stresses of buying and selling together.
We realize that the process of buying, selling, and moving is different for every home buyer. Here are some advantages and disadvantages to a few potential timelines:
Buying and Selling on the Same Day
While getting everything done at once may be the quickest way to transition between properties, it can come with its own set of difficulties in terms of timing and financing.
In order to buy and sell simultaneously, you will have to resort to micro-scheduling your itinerary, including getting a mortgage commitment from your lender and scheduling movers for an exact time window for your move-out and move-in. To avoid some of this hassle, consider extending the process slightly to two days; the best option may be to close on day one and then buy day two. Opening up your time window, even slightly, gives you the chance to move out of your property, then stay with a close friend or in a hotel overnight.
If the reason you’re buying and selling at once is because you must close on your sale first and then use the proceeds for the down-payment on your new purchase (maybe as soon as later on the day of sale), talk to your real estate team about having in place a home sale contingency contract, which makes your new purchase dependent on the successful sale of your old home.
Selling First, Buying Second
While this simplifies your schedule somewhat, selling before buying also comes with its own set of logistical questions: Where do you sleep in the interim? How do you store your things?
If you’re already selling but expect the buying process to take several months, you may need to find a short-term housing solution, such as corporate housing, a temporary rental, or an extended-stay hotel. As for your things, keep essentials (like clothing or valuables) with you while securing everything else in a storage facility. Or if you have the space (and your local ordinances allow for it), you may also want to look into PODS, a portable moving container service.
If you expect to buy and move over a slightly shorter period, consider selling your house and then renting it back temporarily from the buyers in what is known as a “rent-back agreement.” Some attorneys can be hesitant about letting their clients rent out their new property right away, but if you can negotiate it, a “rent back” can allow you to remain in the property for 60-90 days, which may better serve both you and your buyers in the long term.
Buying First, Selling Second
The upside to buying first is that it gives you plenty of time to ready your current home for sale and plan for your move.
On the other hand, buying before selling may be the biggest challenge from a financial perspective, depending on your circumstances: In addition to making your down payment, this arrangement will leave you managing two mortgages at the same time. Fortunately, there are ways to wade through the tricky financial waters.
If briefly having two separate mortgages is absolutely out of the cards, you might want to consider a bridge loan, which functions as a short-term loan expected to be repaid with sale of your current property. Be sure to include your real estate team when making the decision to go with a bridge loan – they do often come with additional costs and fees.
Another way to approach buying first is to structure the loan on your purchase in a way that gives you the opportunity to refinance once you get the equity out of your old place. As an example: If you get a mortgage for 80% of the value of your new home, you can then take a home equity line of credit (HELOC) against your old house (if you want to use it as down-payment) or the new house (if there isn't enough available equity in the old one to make a big difference). Either option can then be paid off separately and apart from the 80% mortgage.
So, whether you’re starting by buying or selling, the important thing is to not feel pressured into making a decision that may not be best for you and your family in the long term.
Buying and selling together can certainly a stressful process, but having the right team around you can help lessen the bumps along the way. Fortunately, we’re here to help! Whenever you need a hand with the hurdles of home buying or selling, reach out to Real Group. We’ve got the experience necessary to make buying and selling as smooth as possible.
