Buying and selling a home at the same time is a complicated process. Here are some practical tips that will help things go more smoothly.
Find an experienced agent
Given the complexity of buying and selling at the same time, you will want the help of an experienced real estate agent. An experienced agent will be able to help you price your home optimally, and will be an expert at timing the sale of your home, negotiating the price, and strategies for buying and selling at the same time. Choosing the listing price is one of the most important functions of a listing agent, and you’ll want someone who really knows the local market.
If you think you are ready to discuss the best strategy for your situation, I'd love to meet up with you. If you want more information about my experience, see here.
Determine if you’re in a buyer’s market or a seller’s market
The steps that you take in selling and buying a home will differ depending on the local market. If you’re moving to a different town, you will be selling your home in a different market than the one you’re buying in. In a buyer’s market, there are more homes up for sale then there are people looking to buy. You may find a new home before you sell your own home. In a seller’s market, there are more people looking to buy then there are homes for sale. You will likely sell your old home before finding a new home.
There is not a one size fits all solution for everyone. You have to determine what works best for you and your situation. Here would be some examples of strategies give the market conditions.
If you’re in a…
Make an offer with a kickout clause (in this case the purchase of the new home is contingent on the sale of the old home).
Request an extended closing. This will help give you time to sell your current house.
Make an offer with an extended closing and trust your house will sell. This may feel risky but depending on your house and financial situation, it can work out very well. Pricing your old house will be very important in this option.
Sell your house first and negotiate a rent back agreement. This will give you sometime to shop for a new house without having to move into a temporary rental.
Know your financial situation
The next step in the process is to take stock of your financial situation. You will want to talk to your mortgage company and your accountant or financial advisor to find out the following information. You’ll want to know how much liquid cash you have on hand, how much equity you have in your home, and what types of loans you qualify for. Ask me for recommendations.
A key part of your financial situation is the value of your home. You will want to find out how much your home is likely to sell for. As part of determining the value of your home, you may want to get a pre-inspection to find out how much work will need to be done in order to sell your home. This is also an ingredient in determining how much equity you have in your home. Equity is the amount of money left over after you take the market value of your home and deduct the amount that’s left to pay on your mortgage. In other words, it’s the amount you’ve already paid toward the current value of your home.
Buy First or Sell First?
Now you have some tips to help you in the process of buying and selling at the same time. But which should you do first, buy your new home or sell your old home? We’ll look at some different scenarios for selling and buying your home in our next posts!