Buying a house or selling a house can be an adventure on its own. But what if you are doing both at the same time? Have you ever wondered how the transaction lines up so that you can use the money from the sale of your current house to purchase your next house? Of course, your top concern is likely that you’ll have a new place to live once you sell your house. Here’s how to best navigate this process.
Work with a real estate agent
Before you start, your absolute best bet is to work with a professional real estate agent who can guide you. A good agent can help you decide how to go about a simultaneous sale and purchase based on your unique situation. Buying or selling a home can sometimes be stressful to begin with, but with one of our agents by your side, the process can be quite exciting. (And, dare we say, relaxing.) They’ll help ensure you won’t miss out on finding your new home, and that you won’t feel pressured to sacrifice the price of the one you’re trying to sell either.
Do your part
Choosing the right real estate agent can set you up to tackle the challenges that come with buying a house while you’re selling your current one. But, depending on the market, it may also help to invest in some minor home upgrades. If you’re hoping to sell your house quickly, your agent can advise you on upgrades that make your home more attractive to buyers — and those that aren’t worth your money.
Decide if you want to sell first and buy second — or, vice versa
The first thing to understand about how to buy a house while you’re selling your existing home at roughly the same time is that it’s very rare that the timing of the sale and purchase will line up perfectly. Knowing that there might be some overlap can help you mentally manage your expectations.
If you sell your current home first and buy the new one second, you can put the money towards buying the new property. You don’t have to risk having your home sitting on the market while having two mortgage payments because you’ve already purchased your next home before the first one could sell.
Understand the market and your moves
When you’re selling your own house and buying another, it’s vital that you understand the market in which you’re selling and where you’re planning on buying. In a perfect world, you’d be selling your current home in a seller’s market, and buying your new home in a buyer’s market. But, it’s not likely you’ll be able to have that happen. It makes sense to start with whichever market you’re going to have a harder time in. For instance, if you’re in a seller’s market with low inventory and lots of competition, it’s best to start looking ASAP.
If you’re going to be buying your next home in the city where you’re selling your current home, there are some benefits. Even if the market is leaning more in one direction than other (meaning you’ll have a harder time either selling or buying, and an easier time the other way), completing both transactions in the same market means that you likely know your particular market very well. When you begin the process of selling your home, you can already have your eye on available homes in your area, and perhaps more easily balance both the sale and the purchase of your next home at the same time. Being physically present for both parts of the equation can certainly move things along much quicker than if you were working in two completely different markets in different locations — although virtual and online capabilities have made more things possible than ever before. Your agent will have the best advice.
Have your financing lined up
If you need the funds from the sale of your current home to buy your new home then, of course, you’re going to have to sell first before you start looking for your next home. But, you’re not the first person to be in this situation nor will you be the last, and there are other financing solutions available:
- Utilize a home equity line of credit (HELOC): A HELOC (Home Equity Line of Credit) uses the value of your current home (the one you’re trying to sell) as a collateral for the next home you want to purchase. It’s a line of credit that can be put towards the down payment of your next home until the sale goes through.
- Consider a bridge loan: If there’s likely going to be a gap, then consider taking out a bridge loan. A bridge loan is a short-term loan that’s used as, well, a bridge when you’re in the in-between phases of larger financing.
At the end of the day, it can be tricky to buy a house while selling your own, but it’s not impossible. An experienced agent can help you navigate the very best options — as always.
Bank of America – What is a home equity line of credit (HELOC)?
Credit Karma – How does a bridge loan work?