Introduction
Buying a home when you have to sell the one you are living in can be a tricky process. To buy and sell a home simultaneously can be done successfully, but it does require some thoughtful planning, and the assistance of a Realtor who is familiar with the nuances of this paricular process.
Here are 3 ways to do it:
Closing Contingent
To do this, you would need to make an offer on the new home, contingent on selling the home you currently live in. This means that, if your home doesn’t sell, you can generally back out of the contract on the new home, without penalty.
The downside to doing this, is that the risk is transferred to the Seller. Sellers in a competitive market are reluctant to take a chance on the Buyer’s current home sale not closing, and will often not even consider a closing contingent offer.
However, if you are thinking of going this route, I highly suggest having a contingency accomodation plan in place, in case you can’t find or close on a new home before your current sale closes. Can you live with family or friends, or temporarily rent a home?
The risk to the Seller can sometimes be compensated for by offering a higher price and/or offering other attractive terms.
Owning Both Homes Temporarily
In this scenario, you need to be able to afford both mortgages, and getting approved for a second mortgage is entirely at the Lender’s discretion. It is a good idea to get pre-approved for the second mortgage, prior to looking for the new home.
If you are in a position to do this, you can make a clean offer on the new home purchase, without it being contingent on the sale of the existing home. It is particularly useful, if the new home needs major renovation, and it is going to take a while before you can move in.
The Buyer however carries the risk of their current home taking longer than anticpated to sell, and with it, the financial burden of carrying two mortgages for longer than anticipated.
Renting a Home
Sometimes, as a Seller, you can negotiate an option to rent back your home from the Buyer, after the sale has closed.
This gives you both the time and money to look for and purchase a new home, without having to move out of the current home first.
However, Buyers are often reluctant to consider a rent-back deal because they carry the risk of tenants in the home, and it delays their move-in date.
Conclusion
Buying and selling a home simultaneously can be complicated, especially if there are multiple parties to a transaction trying to do exactly the same thing.
It can create a complex string of transactions that need to be carefully orchestrated, monitored and managed, and you need a great Realtor to guide you though the process.
If you’re thinking about making a move (or know someone who is), I can help you! Just call me or send me a text. No pressure, no sales tactics, just helpful advice and the guidance you need! Promise!
