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 youll have a new place to live once you sell your house. Heres 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.) Theyll help ensure you wont miss out on finding your new home, and that you wont feel pressured to sacrifice the price of the one youre 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 youre selling your current one. But, depending on the market, it may also help to invest in some minor home upgrades. If youre hoping to sell your house quickly, your agent can advise you on upgrades that make your home more attractive to buyers and those that arent 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 youre selling your existing home at roughly the same time is that its 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 dont have to risk having your home sitting on the market while having two mortgage payments because youve already purchased your next home before the first one could sell.
Understand the market and your moves
When youre selling your own house and buying another, its vital that you understand the market in which youre selling and where youre planning on buying. In a perfect world, youd be selling your current home in a sellers market, and buying your new home in a buyers market. But, its not likely youll be able to have that happen. It makes sense to start with whichever market youre going to have a harder time in. For instance, if youre in a sellers market with low inventory and lots of competition, its best to start looking ASAP.
If youre going to be buying your next home in the city where youre selling your current home, there are some benefits. Even if the market is leaning more in one direction than other (meaning youll 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, youre going to have to sell first before you start looking for your next home. But, youre 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 youre trying to sell) as a collateral for the next home you want to purchase. Its 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 theres likely going to be a gap, then consider taking out a bridge loan. A bridge loan is a short-term loan thats used as, well, a bridge when youre 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 its not impossible. An experienced agent can help you navigate the very best options as always.
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