How To Sell A Home & Buy A Home At the Same Time
At the mention of buying a home, most people get excited, but for some an erie feeling comes on them – this could be attributed to having to figure out what to do with the current home. It’s frustrating enough to be a first time buyer, now your a second timer with a mortgage payment to think about.
For most the ability to pay two mortgages is not a reality, and as a buyer it’s going to be very tough to get sellers to take you seriously because you haven’t sold your home yet. I recommend you follow these steps to help navigate you through this often complicated process.
Ask your agent, “Is it a buyer’s market or seller’s market?”
Knowledge is power as the saying goes and this is so true in regards to the housing market. Answering who has the negotiating power in the market will help determine the strategy you’ll use. For example, if it’s a buyers market you’re very likely to find a home at a steep discount however plan to put your home on the market at a discount as well.
In addition to all this, learn to expand your options- this means don’t settle for that one house that took your breath away, rather find other suitable options. The importance of this is that you’re not marooned should the first deal fall through.
Hire a competent agent or appraiser to price your home. Do not set an unrealistically huge price that will scare off buyers but set an appropriate amount- the longer your home is on the market the less negotiating leverage you will have. Homes on the market longer than 45 days often lower the sale’s price or give concessions to entice home buyers.
…it’s wise to ask yourself a few questions such as;
- Are you in a position to handle two mortgages at the same time?
- What happens if your home sells for less than the listed price?
Know and weigh your financial solutions.
Those that opt to sell the house first, the process is relatively simplified as they only have a few additional costs. You may chose to have a rent-back agreement where you negotiate with the buyers to stay in the house for 60-90 days in exchange for rent that is paid to the buyers. This gives you more time to look for a house at your own pace. If the buyer doesn’t agree to the rent-back it is wise to have a conversation with your realtor on ways to cut on the financial burden. Some of your options are:
- Contract contingency – As a seller you can make your sale’s contract contingent on you finding a suitable home. There’s a time limited negotiated, usually 45-60 days, and if you can’t find a home in that time you can exercise an option which allows you to declare the contract null and void. Like rent-back agreements, home sale contingencies are difficult to negotiate in buyer markets.
- Bridge loans – A Bridge loans are short term loans that allow you to hold two homes at the same time. The lender will loan money for the purchase your new home which will be repaid when you sell your old home.
- Short term rental – Yes, short term rentals will cost more but it gives you the option to leave after one month, three months, or six months. Get an apartment to avoid the temptation of jumping into rush decisions.
Do not allow fear to dictate you.
In conclusion, when it comes to the decision to buy and sell a house at the same time, do not let anxiety drag you into a decision that you are likely to regret later on. However, put into consideration the tips above and always plan ahead- this guarantees you will be smiling all the way to the bank. Get an experienced agent to guide you. An experienced agent’s greatest skill is to see the transaction from multiple perspectives, which means they can identify likely, unintended consequences of your decisions.