Each real estate transaction comes with its own challenges, but buying and selling a home at the same time compounds these challenges. The addition of time constraints and another set of buyers and sellers increases the need for appropriate expectations, patience, and perseverance. Proper planning and preparation are key to a successful conclusion for both transactions.
Planning ahead for your back-to-back sale and purchase
You’ve heard people say, “The destination is not as important as the journey.” However, in the case of buying and selling a home at the same time, in many ways the opposite is true. It is important for you to keep the end goal in mind while at the same time detaching a bit from the process. There will no doubt be bumps in the road; the less you focus on those, the better.
Building a great team will help you put together a successful plan for your sale and purchase. What follows is a list of the professionals you’ll be working with. Communicate with them early and often to keep your process moving forward toward the finish line.
Working with your real estate agent
Your real estate agent can help you develop a clear idea of your needs and expectations for the process. Everything will be time-sensitive, but if you are under severe time pressure, it is important to be very clear about your timeline.
If your purchase will be in another market, allow your agent to refer you to a qualified agent in this new market. Their coordination and cooperation will be vital to the smooth running of the process.
Right-pricing your current home
Of course you will want to sell your current home for the highest possible price as quickly as possible. That means you’ll need to right-price your home rather than holding out for the highest price your market will allow. Unlike other situations, you may not have the luxury of waiting for a buyer who will give you top dollar for your home. Talk to your real estate agent about a price that is fair but also encourages buyer interest and enthusiasm.
Searching for your new home
You’ll want to keep your timeline in mind when searching for your new home. That may mean that you’ll need to put more time into your home search or be a bit more flexible in your requirements. If you are looking to sell and then buy your dream home, you may want to put in place a longer process with a stop-over in a short-term rental property to buy you some extra time.
Working with your lender
You’ll need to spend time talking with your lender about the way your financing will work during the time that you are freeing up money from the sale of your current home to buy your new home. Depending on your financial situation, you may need to close on your current home before initiating financing on your next home or you may be able to qualify for both mortgages simultaneously.
There are loan products available that can help you tap into the equity on your current home in order to purchase your new home, and then pay the temporary or bridge loan off when you close. While this may make the transition possible, it can also put you in a bind if the sale of your current home falls through or is delayed. Talk to your lender about your risk tolerance in this regard, and find out what option will work best for you.
Working with your closing attorney or agent
Depending on the location of the two properties, you may be able to close at the same title company or real estate attorney’s office on both your sale and purchase. Alternatively, you may be able to conduct a mobile closing at a location of your choice—a convenient alternative that allows you to better control your time. You may also choose to close by mail or through a proxy with Power of Attorney.
Working with your movers
Unlike a standard move, you may need to have your household goods packed and stored for a while before they arrive at your new home. You may need to have a portion of your items stored and a portion moved to a short-term rental. Talk to your movers about your options so that they can help you determine the most cost-effective and efficient way of facilitating the particulars of your move.
Short-term Lease Options
You may have visions of a same-day sale and purchase. While this does happen, it requires everything to proceed perfectly with the buyers and sellers on both sides of two different transactions, as well as with both of the lenders involved. Just in case this does not occur, it’s a smart idea to put a backup plan into place. Here are some convenient options:
Rent back your current home
If you know when your new home will be ready for you, you may be able to negotiate a rent-back on your current home. This can be done for one day or for several months, depending on your needs and the preferences of the buyers you are working with.
Rent your next home prior to closing
If the home you are buying is currently unoccupied, you may be able to rent it prior to its purchase. Ask your real estate agent to negotiate an early possession agreement with the sellers prior to the closing date. Note: this should not be an opportunity for you to renegotiate the terms of the sale or ask for additional improvements that you missed before.
Rent another property month-to-month
If you need more time between closings, you may want to rent a property for a few weeks or a few months, depending on your needs. It may be a good idea to choose a property that is already furnished so that you can keep most of your belongings in storage, saving you both time and money.
Stay in a short-term rental
Check out short-term rental services like Airbnb for properties that are available for monthly rental. These properties will come with fully outfitted kitchens and bathrooms, allowing you to keep most of your personal possessions safely stored until your new home is move-in ready.