How to Buy and Sell Your Home at the Same Time

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How to Buy and Sell Your Home at the Same Time

Do you have the financial flexibility to buy a new home before selling your old one? If you’re contemplating buying AND selling simultaneously, consider this helpful information.

It’s important to understand whether you are in a buyers’ or a sellers’ market. In a buyers’ market, there are more homes available than people looking to buy. In contrast, a sellers’ market has more buyers in the marketplace than there are homes available. Once you understand which market you are currently in, it’s important to partner with a good real estate agent to guide you through the process.

You’ll need to determine whether you would like to sell your current home first and buy second, or vice versa. If you choose to buy before you sell, here’s some tips on how to make it happen:

  • Make an offer with a sale and settlement contingency: In this scenario, you’ll focus on finding a new home before you list the old one. Once you find a house you love, you’ll submit your offer with a sale and settlement contingency, which means you’ll buy the home only if you can successfully sell your existing home. Typically, the sellers of the home you’re buying are still allowed to seek other offers, but you’ll receive the first right of refusal if you’re unable to remove the contingency when a second offer comes in. Contingencies typically work best in buyers’ markets, when the seller is less likely to get another offer.
  • Request an extended closing: If you’re confident that your existing home will sell in a short period of time, you can always request to extend the closing date of your new home past the standard 30-45 days. This will give you enough time to sell your current home and use your home equity to buy another house. Similar to contingent offers, you’re more likely to have success with this strategy in a buyers’ market.
  • Purchase with significant savings: If you’re in a financial position to do so, you may want to use your savings for your new down payment, then sell your old home. You’ll also need money to cover closing costs, inspections, and moving expenses.
  • Purchase with a HELOC: A HELOC, or home equity line of credit, allows you to borrow against the equity in your current home. You could use a home equity line of credit for your down payment, then pay it off when your home sells.
  • Purchase with a bridge loan: A bridge loan is a short-term loan offered by a bank to cover your down payment, just until your sales close. Make sure to talk to your banker about this option early in the process, because not all banks offer this product and it can be hard to qualify.
  • Rent out your first home: If you don’t need the money from your first home to make your down payment on the new home, you could always find renters for your old home, which would allow you to cover the mortgage costs while delaying the need to sell at the same time as you’re buying.

If you choose to sell before you buy, here’s how:

  • Make an offer with a sale and settlement contingency: In this case, you’ll list your house first, then once you have an offer in hand (but before closing), you can start looking for your new home. When you find a house you love, you’ll submit an offer with a settlement contingency, which means you’ll buy the home contingent on the sale of your existing home closing. This works best in a seller’s market, since you can expect to receive offers on your existing home quickly.
  • Find a temporary rental to live in:,Although moving twice might not be the ideal option, it can give you peace of mind and more importantly, ample time, to find your next dream home.
  • Sign a rent-back: A rent-back provision allows you to sell your home, with the agreement that you can rent the home back from the new owners (and keep living in your home) for 60-90 days. This option can give you more time to shop for your new home, while still giving you access to the money from your sale. Keep in mind that this option works best in a sellers’ market, where buyers must be more flexible with contract terms in order to get the home they want.

Source: https://www.zillow.com/home-buying-guide/buying-selling-at-the-same-time/

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