While buying a new home is an exciting time in any homeowner's life, the prospect of purchasing a home while trying to sell the old one can be daunting.
Fortunately, you have several options when it comes to buying and selling property at the same time. However, before jumping head-first into what you think is your best option, it is crucial to understand each of these choices. That is why we will go over all these possibilities and help you determine which strategy is ideal for you and your family.
Purchase a new home first before selling your old one
While this option may not be perfect for everyone, if you can afford to own two homes simultaneously, this may be the best way to ensure you can get the home of your dreams without worrying about what to do with your current property.
Yet, to go down this route, you would need to have the finances. This may mean you would need to find a lender to qualify you for a loan under these circumstances, which may require showing six months' worth of payments for both homes in your bank account. You would also need to have money for a down payment and closing costs, which could be challenging.
However, if this option is possible, it would allow you to purchase a new home, move in, and get settled before you have to worry about putting your old house on the market. Or, if the market is not doing too well for sellers, you may even want to consider renting it out until there is a better opportunity to sell it.
Consider an extended closing
Another thing you may want to consider if you are thinking about purchasing a new home before you sell your old one is an extended closing, such as a 60-day closing. This may give you enough time to get your home ready to list, list it, and give buyers time to close on it by the end of the 60 days.
Discussing this option with an experienced real estate agent can give you a better idea if this option is a possibility and whether it would work for you.
Sell your current home before purchasing a new one
Another option you may want to consider is to sell your current home before purchasing a new one. Not only can this provide you with the proceeds you need to put a down payment on your dream house, but it can also help reduce the financial stress of owning two homes at the same time.
However, ensuring that everything aligns and you can sell your house and then quickly buy a new one is not always feasible. Thankfully, you can do things to help minimize the risk of spending time in limbo or the time when you are in-between homes.
For instance, many buyers, when they decide to sell their current home before purchasing a new one, may want to:
Rent the home back
One option you may want to try is asking the buyer of your home if they would let you rent it after closing for a period of 30 to 60 days. This is often referred to as a rent-back contingency, and it provides sellers with an opportunity to buy and move into another home without having to scramble to find a place during the in-between time.
Yet, before you rely on this option, remember the buyer does not have to agree to these conditions, and you will be on a deadline regardless if you find a new place or not.
Find temporary housing
Before putting your home up for sale, you may want to find a temporary place to live once your property sells. This can mean living with a friend or family or looking into a hotel or a rental that would allow you to stay for an extended period of time until you find a new home. Just make sure you factor in the extra costs of this option, such as a storage unit that you will likely need to hold all your things.
Be ready to find and buy a new home fast
If you found the ideal home and are ready to put an offer in, selling your home first may be a good idea, as long as you have everything in order to secure the new place quickly. Discussing this option with an experienced realtor can give you a better idea of things you may want to do before listing your current home to help with this process and ensure you can secure the new place as soon as you sell your property.
Purchase a new home with a contingency to sell
Although this option may weaken your offer, especially in a competitive market, it is often the most attractive scenario for many people. Under the "contingency to sell" option, you would put in an offer on a new home, but the closing would be contingent on finding a buyer for your current home. This way, you would not have to look for temporary housing and would avoid paying for two mortgages.
Yet, while some sellers are willing to try this approach, it will often depend on the market and the number of offers they receive. As a result, if you are competing against others for a home, and these other buyers do not have these types of contingencies, the seller will likely go with their offer over yours.
What's the best option for you?
Determining which of these options would work best for you and your family often comes down to many factors, including your financial situation, timelines, and even the housing market. That is why it is usually a good idea to speak with a realtor before making any of these decisions, as well as considering the following questions:
Is your home ready to sell?
You need to assess your home's condition and decide whether it requires a lot of repairs or a significant amount of work. If it does, it may mean more time on the market, or you will not be able to get the type of offers you want on it.
However, if you are in this situation, it does not mean all hope is lost. Instead, you may want to work with professionals like interior designers at LeBlanc Interior Design, who can help ensure your home looks beautiful and is ready to sell. Or you can also look into hiring a home inspector, like those at Metro Boston Property Inspections, who can help you figure out the current condition of your house and determine what work needs to be done on it.
Are you on a strict budget?
Before starting the buying process, you need to ask yourself whether you can afford two mortgage payments. And whether you have enough funds to handle multiple properties as well as other expenses related to the property, such as the taxes. Knowing your budget ahead of time can give you a better idea of what options you have and whether you can buy a new home before selling your old one.
How much time do you have to move?
Are you on the clock for moving out of your home? Or is there some flexibility with the timeline? If you have a deadline to get out of your current home, you may need to buy a new house first to ensure you meet this deadline.
How is the housing market?
If the housing market is hot and buyers are snatching up homes left and right, it may be harder for you to find and buy a home quickly. As a result, in these conditions, it may be better to sell your home first and maximize the profits you can obtain from it. Then when the market cools, you can look for the perfect home for you and your loved ones.
Work with an experienced realtor and figure out how to buy and sell at the same time
One of the best things you can do in a situation where you want to buy and sell a property at the same time is to reach out to a skilled and knowledgeable realtor. For instance, agent Martha Toti is not only a realtor with years of experience, but because of her work, which includes over 150 closed transactions totaling $175 million in sales, she is among the top 1% of agents in Massachusetts and ranks in the top 1% of all Coldwell Banker agents worldwide.
Plus, with her reliable network of other real estate agents, contractors, inspectors, and mortgage brokers, she knows exactly what to do in situations where individuals need to buy and sell a property at the same time. That is why if you have questions regarding this scenario or are looking for new properties to purchase or invest in, contact Martha Toti today for an honest conversation about your options.