Selling and buying a house at the same time can be a logistical nightmare, especially in today’s market where houses are sold in the first days of being on the market and with multiple offers. However, it’s not an uncommon situation.
The first hurdle to overcome is getting your offer accepted to purchase a new home when your offer is contingent on the sale of your current home. With multiple offers, there’s a high possibility that your offer will be rejected in favor of a non-contingent offer. If you can find a home that has been on the market for a little while (that can be a week or so in today’s market) or that doesn’t have multiple offers, you stand a much better chance of the seller accepting your contingent offer.
Unless you are lucky enough to find a new home as soon as you get your current home under contract, chances are there will be an overlap. You may have to move in with family or friends or find a short-term rental while you are in-between homes, and rentals are extremely hard to find right now. Plus, you have the added expense of storing your belongings and moving twice.
Trying to time everything perfectly to close both homes simultaneously and move from one to another is a challenge, to say the least, but it can be done.
WAYS TO AVOID A DOUBLE MOVE
- Have a longer closing on your current home, which will give you the extra time to find a new home and still leave the 30 days needed to close.
- Get pre-approved not just pre-qualified with a lender. This will save time in the closing process.
- Have a post possession or lease back from the new buyer. The last two homes I sold had post possession for up to two months for my seller, which saved double moves. Discuss this possibility with your Realtor.
BUY FIRST THEN SELL
This is the ultimate scenario in today’s market, where you can take your time to find your perfect home and then sell your current home. If you are not able to buy your new home with cash you may want to consider taking out a new mortgage that has no prepayment penalties, and you can pay off immediately or pay down with the sale of your current home. You will have to qualify for both loans.
Even if you want to use the equity from the sale of your home and purchase your new home for cash, this allows you to purchase the new home without a contingency on selling your home and then pay off the new mortgage when your current home closes. You can also purchase the new home and then pay part of the loan off with the equity from the sale of your current home, leaving cash for repairs or remodeling.
Taking out a new mortgage gives you a lot more options and allows you to make a competitive offer by not having a contingency attached. Not all lenders offer these types of loans so make sure you check with your lender first. If you need a referral, please let me know and I can refer you to the top lenders my clients use.
FULL PAYOFF OPTIONS
At any time after closing on your initial loan, you can pay the loan in full with no additional cost. This can be done years after initially getting the loan, or as soon as before you even make your first monthly payment. There is no time restriction or minimum.
RECAST, OR PARTIAL PAYOFF OPTIONS
Obtain a home loan with a smaller percentage down. Later, you use additional funds (often from the sale of another residence) to reduce the loan amount, typically to more than 20 percent down, to both remove the monthly mortgage insurance cost, and also create a new lower monthly amortized payment based on the new lower loan balance. These may not be financially feasible for everyone and carries their own risks which should be discussed with your lender.
There are a lot of logistics, timing, and negotiation involved in buying and selling a home. A good real estate agent can help take some of the stress away, guide you through this process, and negotiate the best possible deal on both sides for a smooth and easy move.
If you would like more information on buying and/ or selling and what your home is worth, please feel free to reach out to me anytime.
Lorraine is a Multi-Million Dollar producing agent, has been a full-time Realtor for over 13 years, is an Associate Broker of KOR Properties, a Certified Negotiation Specialist, and is on the Professional Standards Board. You can reach Lorraine at (602) 571-6799.