How to Sell & Buy a House at The Same Time

 

Buying and selling a home at the same time is not easy but it can be done with a little bit of luck combined with exceptional timing. Many families must make an immediate transition from the home they are selling right into the home they are buying. They don’t have the luxury of storing their belongings and waiting to purchase their next residence.

In this article, we will explore strategies for selling and buying a house at the same time to create a process that provides smooth sailing for everyone involved. Although some things are inevitably going to be out of your control, there are ways that you can create a less rocky transaction.

Correct Steps to Follow to Sell and Buy Another Home

 

Below we will explore the correct steps to follow to sell and buy another home. Although these are not foolproof, they will help you to successfully sell & buy a house at the same time.

1. Start Your Home Search First

You’ll want to start your home search first by researching the home sales in your area. You need to get a feel for the market whether you are simply moving across town or taking the leap of heading across the country. This is especially true if you are selling in one market but moving to another. You’ll want figure out timing as accurately as possible. The length of time to buy and sell can often vary and is impacted by the current local real estate situation.

Is the market a buyer’s market? A buyers’ market means that there is an abundance of homes available for sale. Without a doubt, you will have a much easier time finding your dream house if there is a wide inventory. However, a buyers’ market makes it harder to sell your current house. In a buyers’ market, sellers are often more willing to accept a contingent offer.

Is the market a seller’s market? In a seller’s market, there are more buyers than sellers. You will have a lot more success selling your home in a seller’s market but have a more difficult time finding a new home to move into. Sometimes you can request a rent back from your buyers after closing so you have enough time to find your new house if it is a seller’s market.

Here are a few tricks to remember depending on if the situation is a buyers’ market or a seller’s market:

• Make an offer with a sale contingency in a buyers’ market
• Ask for an extended closing in a buyers’ market
• Draft an offer that has a settlement contingency in a seller’s market
• Request a rent-back agreement in a seller’s market

2. List Your House for Sale (Correctly)

It’s time to list your house for sale but how do you go about it correctly? Here is a brief outline of the steps needed to list your house to obtain a quick sale:

• Interview real estate agents: It’s time to find a pro that you can trust. Ideally, you want to look for experience while also finding someone who you like. Examine their track record of getting homes sold. Is it impressive? Remember to ask plenty of questions so you have a good idea of how many properties have sold in your area in the last year. An impressive real estate agent should close at least 40 transactions every 12 months.
• Hire a home inspector: It’s time to get the things fixed in your home that might slow down the buying process. With your own home inspector, you can uncover problems and take care of them before the buyer’s inspector finds the problems. Basically, hiring your own home inspector and undertaking the needed repairs early is a great way to speed things up.
• Stage your home: Staging is a great way to move a house quickly in today’s real estate market. It creates a very warm and vibrant ambiance that appeals to a buyer. Also, you should hire a professional cleaning service to make sure everything is pristine and smells fantastic. Do not overlook the home’s curb appeal. Remember, seeing your house from the street is the first way to intrigue a buyer. You want the landscape to look fantastic. Once things look good inside and out it’s time for professional photographs
• Pricing the home: It is imperative that you price the home right. It should not be too high. The real estate agent will run a comparative market analysis so you can get an idea of the price point for homes in your area. You can look at which ones are moving plus the projected time on the market.

Once the above checklist has been worked out then it’s time to list your house correctly on the MLS. Hopefully, you’ll have an offer quickly so you can move on to buying your next house.

3. Negotiate a Deal with Strong Buyers

Many home sellers think they can breathe a sigh of relief when they have an offer on their home, but this is when the hard part starts: negotiations. Chances are good that when you look at the offer you will not feel satisfied. It is rare for any offer to have everything you want and be perfect. It is time to negotiate with the buyers so you can get what you need and want.

Negotiations consist of counteroffers. If you are not satisfied with the offer, then it’s time to counteroffer.

Don’t be surprised if you receive a contingency offer. Ideally, the offer should have very few if any contingency clauses. Below you’ll find a list of common contingencies that might be in the offer:

• Contingent sale: Sometimes a buyer will want to purchase your home contingent on the sale of their home (which might be what you are hoping to do too). Sadly, this is always considered a week offer because it is complicated, especially if you plan on quickly selling your home and buying another. You’ll want to try to avoid a contingent sale.
• Financing: The buyer will only buy your home if they can get financing. If the buyer already has pre-approval from a mortgage lender then this is not a problem.
• Timing: They will only buy your home if they can move in at a certain time. This might be a problem if you plan on working a rent back into the contract.
• Inspections and disclosures:  The buyer must approve of your disclosures and the results of their home inspection. Usually, they request a certain amount of time, such as a couple of weeks, to carry out the home inspection and receive the disclosures.

You will either accept the offer, reject it, or reject it plus counter with your own counteroffer. Ideally, you should never reject an offer without making your own counteroffer. Remember, in real estate, everything is open to negotiations.

A rent-back contingency is a great option when selling and buying at the same time. You will ask the new buyer of your home to allow you to rent back the house for 30 to 60 days after the close date – known as a rent-back contingency. Please remember, not every buyer is going to agree to this but it’s an option that many take when buying and selling at the same time.

4. Make an Appropriate Offer on New Home

Have you found the perfect house? Then it is time to make an appropriate offer on the new home. You’ll want to sit down with your real estate agent to draft the offer. Hopefully, you have obtained a pre-approval letter from your mortgage lender which will make your offer stronger. You’ll need to determine your down payment (whether it comes from savings or the sale of your house). If the offer on your new home is contingent on the sale of your current residence, then you’ll need all that information included in the offer.

5. Work Like Crazy to Get Through Escrow and Closing on Both

The escrow and closing process is a stressful time and you are probably going to have to work like crazy to close on both. Depending on timing, you might be able to make an offer on your new home quickly if the house you are selling is about ready to close. This will eliminate the need for a contingency. Usually, when the buyer of the house you are selling has full approval from the lender then you can feel confident that the sale will finalize. In such a situation, you could delay the close of your new home so that it coincides with the close of your current house. However, you’ll need a buyer who is willing to agree to the situation.

How To Reduce Your Risk

 

It’s hard to foresee everything when buying and selling at the same time. Even in the best of circumstances, it is still fraught with unknown variables. However, there are ways that you can reduce your risk.

Below are just a few tips on selling and buying at the same time:

• Never assume it’s all going to go smooth. Instead, prepare for the unknown so you are ready for surprises
• Always keep your emergency fund available because you might need a hotel or short term rental
• Have your down payment ready
• Keep copies of everything and stay organized
• Consider a rent back to provide you with a much needed cushion of not only time but also funds (it can take several days after close for a money transfer to take place)

Buying a home with a contingency clause for the home you are selling

A contingency clause means that you will be buying the house only if your house sells. The contingency clause is added at the time that you make an offer on the home.

Typically, a contingency offer proceeds in one of the following ways:

• You find a buyer for your current residence and your contract on the new home can move forward without a hitch.
• If you do not find a home buyer within the required time frame (in most cases 30 to 60 days), the contract is rendered void. The buyer will return any money and you must again search for a new home.
• A kickout clause lets a seller keep their home listed on the market and if they find a buyer while you are in the process of selling your home then they can provide you with a 72 hour notice to either continue the contract or they can drop out to accept the new offer.

Keep Everyone on The Same Page

When you are buying and selling at the same time there are a lot people involved in the process. You must consider the buyers and the realtors involved in the transaction. Everyone is stressed. Issues can arise on all fronts. Maybe the buyers need extra time because they are having a problem selling their own home. You’ll want to regularly communicate with each other, so everyone involved stays on the same page.

Negotiate in Good Faith

You’ll want to go into the home deal with honesty and always deal fairly with each other when negotiating a home contract. You certainly don’t want to breach the contract, or the other party could argue that you did not negotiate in ‘good faith’.

Protect Your Deposit on Buying & Selling

Your deposit is referred to as ‘earnest money’ because it shows that you are in earnest with your offer. The money remains in escrow until the close date. It is safely held by a third party title company. When the sale finally closes, the earnest money is applied to the down payment.

The only way to get your earnest money returned is through contingencies:

• Financing: If the financing falls through.
• House condition: After a home inspection, the condition of the house is not acceptable.
• Title search: A title search reveals a lien against the property or other problems with the ownership of the property.
• Appraisal: If the house fails to appraise out for the asking price.

Mistakes to Avoid on Buying & Selling at the Same Time

 

It’s scary to buy and sell a house at the same time. You are probably afraid that you’ll make a mistake. Luckily, most mistakes are avoidable.

1. Dragging your feet to prep your home for selling

Does your house need work before you sell it? Be honest with yourself about it. Maybe it needs repainting, new carpets or to have a deck repair. Simple tasks like new grout in the bathroom can make all the difference when selling a home. Ideally, you should tackle the tasks before you ever start the process of selling your home and buying another house. Prep your home before you plan to sell.

Sadly, some people underestimate how long it takes to prep a house for sale. You should always give yourself plenty of time to get everything done.

2. Not having a backup plan

Buying and selling a home at the same time takes coordination on all fronts. It’s a difficult process and not for the weak of heart. In fact, lots of roadblocks can occur which stall or change things. Therefore, it is imperative that you have a solid backup plan in place and adequate funds to sustain you. In a pinch, you could have to rent someplace short term.

3. Overextending yourself

Overextending yourself by buying too much and failing to get a pre-approval on the loan can happen to anyone. Honestly, pre-approval is just because it gives you an idea of how much house you can realistically afford. Many people mistakenly believe that they can afford more house than they can due to an increase in income or large down.

4. Not Negotiating Correctly

Negotiations matter. You’ll want to be upfront with the sellers and buyers. If you are making an offer on a home, then be sure to have a contingency plan in place to protect yourself and as an act of good faith. Always give yourself a cushion when selling your existing home. You might have to take a lower offer. Many people want to use their entire sale price as a down payment on another home but if that is your plan then you should plan to have less money than expected.

5. Using Multiple Agents

You do not want to use multiple agents to list and buy your new house. Ideally, you should use the same skilled agent for both transactions. This will make a close easier and more attainable. Only if you are moving out of state or if the agent is working exclusively with buyers or sellers should you rule them out.

A single skilled agent can make the difference in any real estate deal. When looking for an agent, try to find one that has successfully closed at least 30 properties in the last year. Selling and closing on a house at the same time is a process that requires experience so having a knowledgeable realtor to work alongside can be the difference between success or failure. Do your research and don’t be afraid to interview several realtors before making your decision.

6. Closing On a Friday or End of Month

Working closely with an agent, you’ll be able to determine when is the best time to close on your current home and then you can go on to the close of your new residence. Ideally, you should close within two to three days of each. Also, avoid closing on a Friday. Usually it takes several days to receive the money into your account so closing on a Friday will extend the wait and could complicate the close of your new home.

Remember, banks usually cease wire transfers by 3 pm so closing during the early morning hours will give the money more time to reach your account. Another thing to avoid is closing at the end of the month because banks and title/escrow companies often become backed up as the month ends which can cause delays in the process.

Final Thoughts

The above strategies for selling and buying a house at the same time can help you make the complicated process easier and less stressful. Just remember that despite the best laid plans, sometimes stumbling blocks occur but you have laid out a strategy then you should be able to maneuver around them with ease and continue trudging forward to attain your goal.