Selling your home while buying another home will put your multitasking skills to the test. Ideally, you will list and sell your home quickly and use your home’s equity to help fund your home purchase, and find your next home just as quickly. However, the home selling and buying process doesn’t always work out so perfectly, and there are overlaps when selling and buying simultaneously. Therefore, since some factors in the processes are out of your control, timing is key to smooth closings. If you’re buying and selling your Southwest Virginia or Northeast Tennessee home at the same time, this guide will help you navigate the transactions like a pro.
Should You Buy or Sell First?
The first question you’ll probably have if you have a current mortgage and are planning on purchasing a new home is whether to sell or buy first. Considerations of what to do vary by individual. Some say that selling before buying may mean you will not have anywhere to go after closing, while others want to use the funds from selling to help with a downpayment. On the other hand, buying first may lead to having two loan payments and upkeep of two properties until you receive an offer on your current home. The decision of whether to buy or sell first is up to you and what works best for your circumstances.
Pros of Selling Before Buying Your Next Home
Many people choose to sell their current home before buying a second home. This typically results in additional funds to work with when purchasing another home because you’ll know exactly how much equity you’ll receive from the sale, which can help reduce the financial stress of buying a house. If your current home is listed and currently has a contract, it can help your offer be more appealing if you must include a contingency of selling your current home first. In today’s real estate market, sellers are more open to accepting offers with a home sale contingency and showing that the home you must sell is under contract can boost the sellers’ confidence in your offer.
Cons of Selling Your Current Home Before Buying
While selling before purchasing your next home has its appeal, it also comes with challenges. Selling your home first means you’ll have a deadline for moving out and finding another place to stay. If your current home sells before you have closed on your new home, it can leave you in a living limbo. Therefore, you’ll likely have storage fees and temporary housing expenses until you purchase your next home. If financing your second home purchase, another con is higher interest rates. With increased interest rates, you’ll likely pay more than your previous loan.
Pros of Buying a Second Home Before Selling Your Current Home
Buying a house before selling your current home can reduce some of the stress of moving because you often have greater control over when you must move. There are also no worries that you won’t have a place to stay or securing storage for your stuff on closing day. Buying a home first often results in a more relaxed home buying process, as you are only focusing on purchasing instead of juggling buying and selling at the same time.
Cons of Buying a Home Before Selling Your Current Home
If you must sell your home before buying a second house, including a home sale contingency in your offer can sometimes weaken it. This is because if your home is not listed for sale when making the offer, sellers must put faith that you’ll find a buyer promptly without knowing anything about your property. Therefore, it is beneficial to list your home and ensure your agent lets buyers know upfront that the sale is contingent on you finding another home. Other cons are making two monthly mortgage payments until you sell your current home or find a renter for the house that will help you cover the payment. For many, a second home purchase will require getting a loan. For some people, buying a house before selling their current home may make it difficult to qualify for a mortgage.
Tips for Buying and Selling a Home at the Same Time
While buying and selling houses simultaneously may sound daunting, there are ways to navigate the transactions smoothly. Working with a real estate agent can ensure the timing is just right by making the buying and selling process work for you by negotiating closing dates and helping keep everything on track.
If you are concerned about buying and selling at the same time, your lender has options to make the money work to afford your next home. Talk to your lender about a bridge loan program that will allow you to go from one home loan to the next seamlessly or low-downpayment mortgages to make purchasing your next home more convenient. Understanding all your options and working with knowledgeable professionals can take the pressure off of buying and selling simultaneously.
Contact us if you have questions about selling a home while purchasing another. Our well-trained real estate professionals can help you navigate the transactions like a pro!