Both buying and selling a home are equally stressful, but what about when you are trying to coordinate buying and selling a house at the same time?
There are a lot of moving parts, and the agents involved work together to insure the smoothest possible transactions for our clients. When selling a home and buying at the same time, here are some things to think about to make the move as smooth as possible.
Simultaneous Closings
Truly simultaneous closings are rare these days, especially when financing is involved. Regulations put in place to protect consumers have made simultaneous closings very difficult to pull off. Concurrent closings occur when a party is selling and buying properties at about the same time. Usually within a couple of days of each other. The best scenario is to work with the same title and escrow company for both transactions if they need to close at the same time. Usually the sale of your home is closed first. Then the mortgage is paid off and the purchase of the new home is closed.
Selling Your House First
Selling a home ahead of buying is the most risk-free alternative. This way neither transaction is contingent on the other. However, this requires families to make an extra move and have a place to live while waiting to close on a new home. So, in terms of convenience and expense selling first is not always the best scenario. If you have the ability to secure a short-term rental, or to put your belongings in storage and stay with family it’s a great option. Then you can enjoy the luxury of taking your time to look for and close on a new home. One option that sometimes works out is to rent your home back from your buyers while you wait to close on your purchase. This works well when the buyers are not in a hurry to move in and you both parties agree on a timeframe for moving.
Buying Before Selling Your Home
Buying ahead of selling is a dream in terms of convenience. This allows time for the move, and maybe doing some renovations or decorating before moving in. But qualifying for a new mortgage without a contingency on selling an existing home is the question. If you can swing the mortgage, or are paying cash, it may be a great option. Remember to realistically consider how long you can afford to maintain two properties. Expenses like maintenance costs can add up if it takes you longer than expected to find a buyer for your present home. In this scenario, you may want to rent your new purchase back to the sellers. An alternative could be listing it as a short-term rental, while you wait to close on the sale of your existing home.
Things To Consider
Consider your buyers and sellers carefully when trying to coordinate a sale and purchase with a short time gap. The last thing you need is a seller or buyer who is displaying signs of being uncommitted to the deal. While no deal is guaranteed until closing, when you need a purchase or sale to coincide with your schedule, you should carefully evaluate who you sign a contract with. A contract with contingencies on other deals going through or a lender expressing doubt about final financing approval are red flags. Other red flags that your deal could fall apart are a low good faith deposit, buyers asking for unreasonable repairs or allowances, or sellers whose moving plans are questionable.
If timing is the number one concern when deciding if buying and selling a house at the same time will work for you, check out my blog post: Should You Sell To An Instant Offer Company. It goes over all the pros and cons of using an ibuyer.
