Buying and Selling Simultaneously
Most first-time home sellers never think about how tricky the process of buying and selling a home at the same time can be… until it’s time to do it! Buying a new home while you’re still living in your current home can create a long string of dominoes. And if just one of these dominoes fails to tip over in the line, the whole thing falls apart. Let’s walk through the entire process of how to buy and sell a home simultaneously, to ensure that all the pieces come together easily for you! Here are the 3 options for buying and selling your home simultaneously.
Option #1: Closing Contingent
Most homes are sold on a contingency. A contingency is a condition that must be fulfilled for the transaction to move forward. In this case, you would put an offer in to buy a new home – but you would only be obligated to buy it if someone purchases your current home. In essence, if your buyer falls through, then you reserve the right to back out of the new home’s contract as well. In addition, you can add a contingency indicating that you as the seller, are not obligated to sell your home unless you find a new home to purchase.
The obvious drawback to selling a home contingent is that it transfers all the risk to the home seller. Most sellers want the least amount of contingencies possible, and don’t want to assume that risk on behalf of their buyer. This is especially true if you’re trying to sell a home in a really competitive market (which we are in right now!).
Option #2: Own Both Homes Temporarily
This is a viable option if you can afford to carry two mortgages. In this case, you would get a mortgage on the new home, and wait to move out of your current home until you’re ready.
This process is helpful when your new home needs major renovations, but you don’t want to move in until the renovations are complete. It’s also helpful when you’re turning your old home into an investment property and you’re planning to rent it out after you move into your new home.
But there are several drawbacks. First, you’d need to be approved for a second mortgage, which is entirely up to the bank’s discretion. Second, you’d have to pay both mortgages simultaneously. Third, you can’t apply the funds from the sale of the first home towards the purchase of the second – which means you’d need to come up with the down payment out of pocket.
Option #3: Rent A Home
Most home sellers are unaware that they can stay in their current home after it sells by renting it back from their buyers. Yep, it’s called a rent-back deal. In this case, you would get all of the proceeds from the sale without having to move – which gives you both the time and money to purchase a new home. Renting back is a super common occurrence in the market, where inventory is so low.
I have also encountered sellers who have decided that it makes sense for them to rent a home or an apartment because the amount of equity they have is worth not knowing where they will purchase next!
Main Takeaways
Again, buying a home when you have a home to sell can be tricky business. Orchestrating a transaction like that is an art form and you need a great real estate agent who can guide you through that process. If you have questions about anything I covered today, or if you’re thinking about making a move, feel free to email me at [email protected] or text me at 443.470.9595. I’m always happy to help!
Thanks for reading!
