Selling While Buying

Although the process of buying a home can be stressful for first-time homebuyers, they do have one distinct advantage – they don’t need to sell their current property at the same time. Simultaneously trying to sell your home for the best possible price while searching for your perfect next home, and aligning the purchase and sale timelines, can be an extraordinarily stressful process.

Start With a Plan

Before you begin the process of listing your home or obtaining preapproval from a lender, you should take the time to analyze your budget. Determine how much equity you have in your current home, how much you can allocate for a down payment on your new home, and the rates you qualify for based on your current credit score.

This is also the step where you should establish a general price range for your next home. You can use tools like Zillow or Redfin to browse the types of homes or areas you can afford before beginning your home search in earnest.

The earlier you start the planning process the better. Seasonal variations in home prices, as well as average time on market, may justify accelerating or delaying listing or buying. However, every household’s situation is unique, and you may not have the luxury of putting off the process.

Setting a realistic timeline for the sale of your current home and the purchase of a new one can be helpful. Your timeline, financial flexibility and housing needs may help you decide whether you should prioritize selling or buying first.

Utilize Contingencies

The two most relevant contingencies for families who are both selling their current home and buying a new one are the sale contingency and purchase contingency:

• Sale Contingency: Ensures you aren’t obligated to buy a home until your current one sells.
• Purchase Contingency: Lets you stay in your current home until you’ve secured a new one.

Finding buyers and sellers willing to accept these contingencies may be helpful, although their willingness may be based on market conditions and competition.

Motivated buyers who don’t need to relocate immediately may be more willing to agree to purchase contingency. Sellers who are not on a tight timeline might be more amenable to a sale contingency, particularly if you offer the best bid for their property.

Consider Your Financing Options

Many homeowners searching for their next property plan to use their current equity to fund their down payment on their new home. This often makes people believe that they must sell their home before purchasing a new one. However, the market, buyer contingencies or happenstance may disrupt your plans.

What if you find the perfect home and want to finalize negotiations as quickly as possible so another home shopper doesn’t snatch the home out from under you? There are several options that can help in this type of scenario:

• Bridge Loans: These short-term loans allow you to use the equity in your current home to fund a down payment before it sells. While not for everyone, these loans can be beneficial if you find your dream home before you sell your current home.
• Home Equity Line of Credit (HELOC): Secure a HELOC before listing your home to tap into your equity for upfront costs.
• Dual-Mortgage Preapproval: If you have the financial capacity, consider getting preapproved for two mortgages to avoid timing constraints. Dual preapproval ensures you can temporarily continue making payments on your current mortgage as well as your new mortgage.

If you use a HELOC or bridge loan to cover the down payment, you can make lump sum payment to the mortgage company with your equity from your current home once the sale is closed. The end result is essentially the same as if you had that money up front for a down payment, although you may temporarily accrue some additional interest at the start of your new mortgage due to the temporarily inflated principal balance.  

If this is your plan, ask your lender about recasting fees and be sure your new home loan doesn’t have prepayment penalties.

Temporary Housing Options

Many homeowners do prefer to sell before they buy because it allows them to avoid alternative financing headaches. The good news is there are several temporary housing and storage tools that can make the transitionary phase easier:

• Short-Term Rentals: If you sell before buying, look into furnished rentals or extended-stay hotels for flexibility.
• Rent-Back Agreements: Negotiate with your buyer to rent your home back to you for a short period after closing. This gives you more time to shop for your next home without rushing.
• Portable Storage Solutions: Use storage pods to securely store belongings during a transitional period, making moving simpler.

Timing Strategies

You may benefit from working with a real estate agent who can help you synchronize closing dates. A real estate company like 72SOLD that specializes in attracting competitive offers quickly can make it easier for you to coordinate closing dates.

Also be open to listing strategically, such as listing your current home first and committing yourself to finding a new home quickly. Managing both processes concurrently increases the likelihood of aligning sale and purchase dates.

Get Help Selling Your Home Quickly on Your Preferred Schedule

The team at 72SOLD leverages effective marketing, pricing and open house strategies to get competitive offers fast. If you want help aligning your home sale and purchase dates, our team can help. Get our price for your home by filling out the form on our website.