For current homeowners looking to move to a new home, buying and selling houses at the same time can seem like a bit of a paradox. In most cases, buying a home is contingent on the challenge of simultaneously selling your home.
Like most folks, you’re likely here because you don’t have multiple homes to hole up in during these exciting (but stressful!) times.
Fear not, as many real estate businesses help people through this exact situation – here, we’ll discuss a few considerations to review and walk through the steps required for both buying and selling houses at the same time.
Is it a Good Idea to Buy and Sell a House at the Same Time?
Buying and selling houses can be a great idea; but there are a few factors to consider before taking on this venture.
The most pressing matter in the process of selling and buying a house is the existing mortgage on your current home. Buying your next home will require taking out another mortgage, meaning you’ll have two payments until the former home sells.
Much like when you obtained your current mortgage, the same process applies here: you’ll want to check today’s mortgage rates and use a mortgage calculator to help figure out your budget.
The sale of the first home will allow you to pay off the remaining mortgage balance and collect accrued equity after satisfying other conditions of the home’s sale. Some things to note are as follows:
- If you’re underwater in the first home, try a short sale. Hopefully, the current hike in home prices worked in your favor. But if not, you might owe more than your home is worth. In this case, you may want to attempt a short sale by getting permission from the lender to sell the home at their loss. Keep in mind, a short sale typically results in the forfeiture of your down payment and will damage your credit.
- Pay the balance out of pocket. Sometimes, there is only a slight difference to be paid when closing a home sale. If you can’t swing a short sale and the balance isn’t too high, you should use any savings you have to avoid taking out loans or selling other assets.
- Wait until conditions are more favorable. Though most try to avoid paying two mortgages when home buying and selling, it makes sense in other financial circumstances. Often, a repair (e.g., a new roof) or renovation can significantly affect a home’s sale price, meaning holding onto your home until such projects are completed can yield better returns.
Outside of scenarios where a seller owes more than a home is worth, some other factors can affect when buying and selling houses at the same time.
When selling your house before buying your new home, you may need somewhere to stay in the interim, which can mean staying with family, in a hotel, or even renting. Though it can be relieving to sell your home with favorable conditions, selling early often causes many to rush to buy and view potential properties through rose-colored glasses.
However, selling early typically provides more funds to work with, making it easier to cover a down payment. This means you’ll have an easier time getting qualified for another mortgage.
On the flip side, making a purchase late into your home buying and selling journey (or after) will come with other challenges and benefits:
- You’ll have two mortgage payments until the former home sells, which also means your DTI ratio will be higher for the duration, plus you won’t have the funds from the sale.
- Selling later means you won’t need to rush the move and will not feel as compelled to jump on the first offer that arrives.
How Do I Sell My House And Buy Another At The Same Time?
Simultaneously buying and selling houses has a few more hurdles than an outright purchase, but it’s manageable with a little planning. The following steps should help you get where you want to be.
Market & Money
1. Know the Market. Understanding market trends helps you decide the best time for home buying and selling. Real estate was recently in flux, and it’s common for conditions to change throughout the year. Do some research on your own before approaching a realtor, unless you already have someone you know and trust.
2. Perform a Financial Assessment. Consult a lender to see if you can handle two mortgages or use home sale proceeds for a down payment. Remember that you can use our tools to help generate figures you can use to help with your decision.
Finding Your Team
3. Find Your Real Estate Agent(s). Seek a qualified agent through referrals, online reviews, or open houses. Most people will use the same agent for both buying and selling houses (as it’s typically more convenient), but using a separate agent for your new location can sometimes be more favorable.
Preparing to Sell
4. Spruce Up Your Home. Make repairs, stage your home, and boost curb appeal. Be transparent about any issues, and be prepared to cut a deal if you can’t get to something before listing your home. Check out our home selling checklist for tips to help get your home ready.
Securing Your New Home
5. Determine Your Down Payment Strategy. Save for a down payment or plan to use home sale proceeds. As we discussed earlier, selling your existing home will impact the funds you have on hand. If you can’t sell early or buy and sell houses simultaneously, explore government loans with lower down payment options. You can also use bridge loans, home equity loans, or HELOCs to bridge the gap between buying and selling.
Moving Forward
6. List and Sell. Partner with a realtor to handle pricing, staging, marketing, and buyer offers.
7. Mortgage Approval. Like your current home, get pre-approved to show you’re a serious buyer and allow your realtor to put in offers on homes you like.
Negotiating & Closing
8. Negotiation with Sellers and Buyers. Your potential buyer may ask for a lower sale or allowances if certain repairs or renovations are needed or wanted. You’ll also be able to negotiate with the seller of the home you’re considering. Understand that these terms will impact the money you’ll have on hand after the sales are complete, so review everything to ensure it’s viable for you to be buying and selling houses at the same time. You can also consider negotiating a sale contingency when buying (if the market allows) or a rent-back agreement with the buyer for moving time if required.
Remember that closing typically takes 30-45 days, but closing dates can often be adjusted with enough advance notice. Buying and selling houses at the same time can be a lot of work, but once complete, you’ll be all set to enjoy your new home!
