Today we’re talking about if you plan to sell your home and buy another, what should you do first?
If you sell first, you’ll be under a time crunch to find another home quickly. And if you buy first, you’ll be under pressure to sell your old home. So let’s take a look, and see what needs to happen when buying and selling at the same time. The first thing you need to know is what you desire, and what you can afford are in sync.
Secondly, where’s the down payment coming from? You will most likely need 25% of the purchase price, in cash, in order to make the transaction happen. If that cash is coming from your existing house, you either need to sell it first and then go house hunting, or tap the equity you have built. However, it’s important not to place the house on the market before you tap this equity. So now you know where the money’s coming from.
Buying Your New House First
Strategy A: is buying your home first. If you are financially capable, buying your home first has many advantages. Primarily it will be so much easier to move into your new home, especially if you have kids and pets. Not having to stay at your house, continuously cleaning it, and leaving each time there’s a showing, is really convenient. Secondly, it might be the best option for you not to miss out on the special property you desire.
Strategy B: is the contingent offer. This is where the seller accepts your offer with the caveat that you need to sell your old home. This avoids having to carry two mortgages at the same time, and while this strategy is available, it isn’t likely the seller is going to accept it, and I would advise you not to accept that type of an offer either, because there’s too much risk.
Selling Your House First
Strategy C: is selling your home first. If you sell your home first, it places you in a great position as a buyer, because you have nothing to sell. You’ll have peace of mind that once you find your home, you can make the transaction happen. However, this option can trigger other expenses, with the possibility of temporary housing, unless you can negotiate a longer closing date, or execute a use and occupancy agreement.
If you opt for temporary housing, landlords typically require first lease security deposits, and a one year lease. If you have kids and pets, know that not all housing types are available to you, and you need to be cognizant of the school districts, should they apply.
Long-term stays at widely recognized hotel chains are an option. Also, where will you store your items? Will you use a moving truck, and pay the daily moving rate? Will you use a mobile container, or a self storage unit?
So what are some other options? Well, typically you have six weeks from the time you place an offer on your new home, and list and sell your existing home, so you could do a double closing. And that means you need to get your house ready to sell now. Once you find that new house, place yours on the market immediately. Once the house is on the market, always allow every showing, and accept backup offers, in case your buyer backs out. Yes, this does happen, but not often, because in most cases the buyer would lose their deposit money.
It’s important to have an agent who does this regularly, because communication is the key.