Buying A House While Trying To Sell Another
Garrett Callahan is a freelance writer who writes on the ins-and-outs of buying the perfect home. For over six years, he has written extensively on travel, history, and culture, and he spent the past two years researching the home-buying process as a first-time homeowner. Based in Massachusetts, he is an admirer of historic homes and loves an old house with a good story.
buying a house while trying to sell another
In a perfect world, your next house would be ready and waiting as soon as you turn over the keys to your previous one. But of course, the world is not perfect, and the timing between selling one home and buying the next does not always line up the way you want it to. Take heart, though, because a little planning and working with a savvy real estate agent can help make both transactions run more smoothly.
There are a few different ways to go about purchasing a home while selling your other home, but none are entirely smooth and free of stress. Also, the method you use isn't always within your control, as other buyers and sellers are also involved in the process.
Sometimes, you must find a new house quickly to relocate for a new job, or you may just find your dream home and want to make an offer before it gets away. If you're trying to purchase in today's competitive real estate market, you may have to buy a house before selling your current house just to beat other offers.
Understanding how to buy a house while selling your own can be challenging. So much depends on other people and market conditions, but there are many options you can leverage. Make sure you ask questions and discuss options with your mortgage lender and real estate agent so you can find the best solution for you and your family.
Before putting your house on the market or committing to buying a new one, investigate the prices of houses in the areas where you'll be both selling and buying. In order to figure out how to sell high and buy low, you'll need a realistic idea of how much comparable houses are going for.
Also focus on whether the local real estate market is "hot" (favors sellers) or "cold" (favors buyers). Since you're both a buyer and a seller, you'll need to protect yourself in your weaker role while making the most of your stronger role.
When the market is cold, you're in a stronger position as a buyer than as a seller. You've got your pick of lots of houses for sale, at reasonable prices. But you might have trouble selling yours. To protect yourself, you might start by buying a second house, but then asking the seller to make your purchase contract contingent upon your selling your current home. A seller having a hard time finding a buyer is likely to accept this contingency, even though it means waiting for you to find a buyer. Be ready to give the seller plausible reasons why your home will likely sell quickly.
In case no seller is willing to accept this contingency, however, at least make sure you can arrange financing. Talk to a mortgage broker about what you'll qualify for. Then be ready to act quickly to put your first home on the market after going ahead with buying a second one. There's a lot you can do ahead of time -- taking care of maintenance issues, going through files for the appliance manuals and other documents you'll give the buyer, choosing a real estate agent and possibly a home stager, and so forth.
If you can't swing such an arrangement, however, you can negotiate with your house's buyer to have the sale contract include a provision making the closing contingent on your finding and closing on a new house. Although few buyers will agree to an open-ended period, some will be so eager to buy your house that they'll agree to delay the closing until you close on a new house or until a certain number of days pass, whichever comes first. Also be sure to fully research the market before you sell, so that you'll be an efficient buyer, who is able to offer the right price on attractive terms.
What if you're unable to perfectly dovetail the sale of one house with the purchase of another? You could own no houses for a time, in which case you'll have money in the bank and will need a temporary place to live. Or you could own two houses at once. The following suggestions should help you deal with such juggling acts:
Point out that you need help for only a short period, and offer a competitive interest rate. Give the person making the loan a promissory note, secured by a second mortgage (deed of trust) on your new house. Try to arrange it so that no monthly payments are due until your first house sells. Be warned, however, that depending on your financial situation, institutional mortgage lenders may refuse to approve a loan where the down payment doesn't come from your own resources.
If you have no other choice, it may be possible to borrow money from a bank or other lender to bridge the period between when you close on your new house and when you get your money from the sale of your old one. This idea is that you take out a short-term loan on your existing house, using it toward the down payment and closing costs on your new house, and repaying it when your first house sells.
Considering selling your house and using the profits to buy a new home? If you have the opportunity to sell first and buy later, you can eliminate several complications sellers face when buying and selling simultaneously.
Despite those obstacles, the appeal of buying a house before selling is compelling: You can move into your new home right away and avoid the headache of lining up your timeline with that of the person buying your home and the person selling you your new one.
Being stuck in a temporary living situation can be uncomfortable, and it's no surprise that most homebuyers would want to get out of it as soon as possible. When people sell their house first, they may feel pressured or desperate to find a new place, especially if they've been looking for a new home for a while.
While the competitive market can be exciting as a home seller, it's frustrating as a buyer. Since so many people are competing over the same listings, it can take a while before you submit an offer that gets accepted. Prospective buyers could end up touring properties for months before they finally buy a new house.
When it comes to the real estate market, this is easier said than done. The homebuying and selling process gets complicated, since so many pieces need to fall in place simultaneously. Between mortgage approvals, home inspections, and timing between all parties involved, it can be difficult to coordinate, even if you ask for an extended closing.
First, work with an experienced real estate agent who can help you understand the challenges and benefits of buying and selling a home in your current market. A good place to start with your agent is having a discussion on current real estate trends so you have a grasp on how much your home will sell for and how much you can expect to pay for a new home.
Trust me, after selling real estate for the past thirty-five years, it happens a lot! Since most people do not have the financial luxury of purchasing another home first, selling and buying often coincide.
The home buying and selling process can be time-consuming, and there are few guarantees. Unless you have a highly desirable home and are willing to part with it for only a fraction of what it is worth, you will probably need some time to sell it.
The fact that you will need to spend time selling your home means that buying another home simultaneously is typically not a workable proposition unless you are willing to pay for both houses at the same time.
A bridge mortgage is a short-term loan used to bridge the gap between buying your next home and selling your old house. Some folks want to buy a house before they sell. You may not have enough money to purchase the next home in that circumstance. A bridge loan will be used to help buy your new place.
Today, most lending institutions will look to see if you can afford to carry two mortgages simultaneously. You will need to qualify to pay mortgage payments on two properties. Getting two mortgages is almost always the best way to buy and sell a house at the same time.
Frankly, this is a HUGE mistake! When you make selling your home contingent on finding another home, your place, in theory, is NOT really for sale. A contingency clause like this will turn off a significant percentage of buyers, especially in a competitive market.
When you sell your current home, you want to find another house quickly and get it under contract. Given that you want to move soon, it is wise to narrow your search to specific areas and even particular types of properties before you list your current house.
On most occasions, when buying and selling a home at the same time, the closing for both the buy and sell will happen on the same day. The home you are selling will close in the morning and the home you are buying in the afternoon.
No doubt selling and buying houses in the same time frame creates a lot of stress. There is constant worry if everything is going to work out as planned. It almost always does, having been through the simultaneous buy and sell process so often in my career.
Having a sound game plan and working with a top real estate professional can help you achieve your goals. If you are in my area, please reach out as I love working with those who are buying and selling a home.
Use these additional home selling articles to avoid getting stuck owning two homes. Buying and selling a house simultaneously can be done as long as you are prepared and have a great real estate agent in your corner.
About the author: The above Real Estate information on buying and selling a home at the same time was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for 35+ Years. 041b061a72