If selling a house is a challenge and buying one is tricky, then it’s fair to assume that selling and buying a house at the same time is a real adventure. While working to accomplish both tasks simultaneously adds an extra layer of complexity, it can be done. In fact, homeowners who are relocating, upgrading to a larger home, or downsizing to a smaller one do it all the time.
Selling and Buying a House at the Same Time
In an ideal world, you would be able to close on the sale of your old home and the purchase of your new one the same day. While it may happen that way occasionally, coordinating multiple closings with assorted parties who have their own schedules to worry about isn’t easy. It helps to know your options and understand the strategies that can help you manage the timing.
Knowing Your Options
When trying to both buy and sell, you hope to make everything come together neatly, but that isn’t always possible. If you had to prioritize buying or selling, which way would you move? Knowing the answer to that question can help you make smart choices as you plot your course toward selling your old home and buying a new one. As Opendoor explains:
- If you buy a new home before you sell your old one, then you’ll need to have the financial resources to manage two mortgages. While you’ll face greater financial stress, your move will be easier, and you won’t need to worry about finding temporary housing. With more control over your purchasing timeline, you can take a more relaxed approach to homebuying.
- If you sell your old home before you buy a new one, you’ll face less financial stress. You won’t have to manage two mortgages, and you’ll likely have an easier time qualifying for a new mortgage and coming up with a down payment for your next home purchase. However, you’ll have to figure out temporary housing arrangements to avoid being homeless, which means you’ll need to move at least twice, so your moving costs will higher. You may also have storage costs. With so much uncertainty, you may feel pressured to purchase your next home quickly so that you can settle in again.
Strategies for Managing the Timing
If selling and buying a house at the same time is your goal, timing is key. How do you minimize the gap between your closing as a buyer and your closing as a seller? As Zillow points out, there are a few strategies that you can use to manage the timing of the situation:
- Ask for an extended closing. If you’ve found the perfect home, but you haven’t yet sold your existing one, you can make an offer and request an extended closing. Pushing this closing back by 60 or 90 days can give you extra time to sell your home, but it can derail your purchase if the seller has other offers. This tactic works best in a buyer’s market.
- Use contingencies. Contingencies define things that must happen for a contract to be valid. When you find the home that you want to purchase, you can use sale and settlement contingencies to ensure that you can back out of the deal if your existing home doesn’t sell before closing. Like closing extensions, contingencies can be a turnoff for sellers, so requesting them could hamper your efforts to put in a winning offer in a competitive market.
- Request a rent-back provision. Buyers have their own timetable. If the individuals buying your current home aren’t in a hurry to move in, they may be willing to allow you to rent it back from them for a specific period. Doing so could give you the time to close on your new home and make your move.
PrimeLending of Kansas City is proud of our stellar loan process and our solid reputation among both consumers and realtors. We know how to close your loan on time*, something that’s essential when you are selling and buying simultaneously. Contact us today to learn more.
* On time closing and fast processing is dependent on many factors including receiving timely documentation from the borrower.