FDIC-Insured – Backed by the full faith and credit of the U.S. GovernmentHow to Buy and Sell a Home at the Same Time
| Posted in Bank Blogs
Thinking about trading up to a bigger home? Or simplifying your life and downsizing to a smaller one? Either way, you may be wondering how to coordinate selling your current home and buying a new one, especially in today’s competitive housing market.
Well, the process is not always easy, but it can be done. Here are some tips to help you:
- Prepare your current home for sale. The easiest way to coordinate a sale and purchase of a home is to sell your home first or at least get it under contract. To do that, you’ll need to prepare your home for sale. You can start by decluttering and making home improvements, such as painting, landscaping, and deep cleaning.
Research the housing market Before you think about buying a new home, you should understand what your current one is worth. Research real estate websites to see homes currently on the market as well as recent sales of homes in your neighborhood.
- Find an experienced real estate professional. Having an experienced real estate professional is critical when you need to coordinate a home sale and purchase. Ask your friends, neighbors, and colleagues for recommendations and conduct interviews. Prospective real estate professionals should give you a market analysis of what your home is worth and give you pointers on ways to increase the value of your home.
Get the price right If you want to sell your home quickly, you need to be realistic about what it’s worth. Overpricing your home will cause it to sit longer on the market, which could delay your home-buying plans. Another risk of overpricing is that you’ll be forced to make price reductions, which could give buyers the perception that something is wrong with the home.
- Prepare your finances. In addition to focusing on your current home, you’ll need to think about what you can afford for a new one. Look closely at your income, assets, and expenses to determine how much you can afford and the amount you need to borrow (if you need a mortgage). Be sure to look at your credit score, too. It will be key in helping you qualify for a mortgage and get the best possible rate. If you can, pay off debt even before you apply for a mortgage.
If you haven’t sold your current home…
If you haven’t yet sold your home and want to proceed with buying another, you have a few options available:
- Make the purchase of the new home contingent upon selling your current one. Keep in mind that this may put you at a negotiating disadvantage as home sellers prefer buyers who don’t have a home to sell.
- Ask to extend the closing of the home you want to buy. If the seller agrees, that could give you a little longer to complete the sale of your home.
- Use your savings for a down payment on the home. If you have enough money in savings to cover the down payment and closing costs on the new home, you could get a mortgage without using the funds from the sale of your home. Keep in mind, though, that you would have to deal with the expense of having two homes until your current home sells.
- Consider other financing options. Home buyers have used short-term borrowing options like home equity loans or bridge loans to help fund home purchases.
If you sell your current home first…
If you have a buyer for your home, you have some options to ensure you have a place to live:
- Make the sale of your home contingent upon you finding a home. That way you’ll be at home until you can find a new place.
- Ask to extend the closing date on the sale of your home. This will give you more time to find a home and coordinate the sale with the purchase of the new home.
- Ask to rent your home from the new buyers. If the buyers agree, your real estate professional and attorney can help negotiate an arrangement.