I need to buy and sell at the same time! How do I do both simultaneously?

Congratulations! You’re ready to move to your next home. It can seem intimidating to coordinate selling, buying, and moving, but there are several tools and strategies that we can use to make it managable. During the Listing Presentation, we’ll talk over the options and create the best strategy for your situation. As we move through the process, we’ll evaluate and adjust based on how events play out. Then, we’ll include contingencies in your contracts for buying and selling to facilitate the process.  

What are some of those options?

Every seller’s situation is different, so there are variety of tools, services and methods to help with a simultaneous buy and sell. Remember that we are dealing with three different parties – us, the buyer for your house, and the seller for the house you want. To a great extent, our strategy will be shaped by each of those parties. We’ll discuss all the options in detail, but here are a few of the common methods we might use:

Qualifying for both mortgages

This option isn’t as far-fetched as many people believe. Especially with dual income buyers or buyers whose financial outlook has improved since buying their current house. If you qualify financially for both your current and your new mortgage, this will allow you to move forward with your new home without selling your current. No specific contingencies are required in the contract to buy your new home. In many cases, once the proceeds from your sell come in, that money can be applied to your new mortgage and your monthly payment adjusted. Be sure and ask your lender if this option would work for you.

 

Pros:

  • Most flexible timeline for purchase and move

  • Most attractive option for most sellers

  • Increased buying power because no contingencies that could increase risk for the seller are required

  • Loan payment can usually be modified to reduce payment after your current house sells

Cons:

  • Requires strong financial position

  • Potential for two mortgages until your existing home sells

Contingency to find suitable housing

In this scenario, the goal is to get a contract on your existing house before making an offer on your new home. We use this scenario once we’re comfortable that we will find a home you love in your price range and preferred neighborhood within a reasonable time frame. We list your house and proceed with the sales process. During contract negotiations with potential buyers, we negotiate a clause in the contract that stipulates that the sale is contingent on you being under contract with a new home within a given amount of time. In a tight seller’s market, buyers are often excited about having found the perfect house for them and will agree to be flexible with the closing time frame. Once you are under contract for your new home, the buyer for yours is notified and the inspection and appraisal processes move forward.

 

Pros:

  • You know the sales price of your house

  • Buyers more willing to negotiate to get your house

  • Increased buying power for you with – fewer contingencies on home you are buying

Cons:

  • Some buyers may not be flexible

  • Pressure to buy new home within the allotted time frame

Contingency to sell home

This scenario work best in a buyer’s market. If a listing has been on the market for a while without activity, or if you are willing to pay a higher amount than other buyers, a seller will sometimes agree to accepting your offer contingent upon you selling your house. The seller you are buying from would want your house to be listed or ready to list, and would want a time limit for obtaining an offer on your house. Additionally, most sellers would want a “kick-out” clause in case they received another buyer with better terms that you offered.

 

Pros:

  • You have new home under contract before selling yours

Cons:

  • Decreased buying power with sellers because of contingency risk

  • Could lose new home to buyer with stronger offer (you would have the opportunity to remove the contingency to sell if financially feasible for you)

Purchase backing services

A new type of business has developed in response to strong seller’s markets to assist clients who want to lock in a new home first and allow additional time to prepare and sell their current home. Using this option, we would find your new home and begin negotiations with the seller. As part of those negotiations, we would stipulate that a third-party business would be the actual buyer. This third-party would close on the home and rent it to you exclusively for a period of time. You could move into the new home and proceed with the sale of your home. Of course, there is a fee to the third-party, and you would be responsible for both rent payments on the new home and mortgage payments on your existing home until both sales close.

 

Pros:

  • Increased buying power – these transactions are view as cash buys by seller

  • You lock in the new home

Cons:

  • Increased fees (can sometimes be negotiated to be seller-paid but can reduce buying power)

  • Risk of rent plus mortgage expenses until your home closes

  • If your current home does not sell for the expected price or within the designated time period, the service re-sells

Another type of available service becoming more common is a guaranteed buyer. These real estate firms buy your home with the intent to make any necessary repairs and resale it quickly. As you might expect, this convenience may come at the price of sellig for less than market potential and higher fees.

Guaranteed buying services

 

Pros:

  • Transaction can be quick

  • Typically not responsible for repairs

Cons:

  • Could net less than if sold on open market

Temporary housing

In some cases, the simplest option could be to plan on living in temporary housing between the sale of your existing home and the purchase of a new one. Short term rental options are becoming more prevalent, and this allows you to have both the proceeds from your current house and time to locate the perfect new home. Of course, the cost is in moving expenses, temporary housing, and convenience.

 

Pros:

  • More time to find your new home and flexibility on closing dates

Cons:

  • Double moving expenses

  • Temporary storage required

  • Inconvenience of two moves

  • Displacement for longer period of time