How To Buy And Sell A Home At The Same Time

By the Mercury Team

Whether upgrading to a larger property or downsizing to a smaller home, buying a new home can be overwhelming. When you factor selling your current home into the equation, things can become even more challenging. Don’t worry! You can successfully handle this major life transition with proper planning, professional help, and a thorough understanding of the real estate market.

Should You Buy or Sell First?

Whether to buy or sell your home first depends on your individual circumstances and priorities, and each approach has advantages and disadvantages.

Buying Before Selling

If you buy a house before selling yours, it’ll provide you with a sense of stability and ensure you have a place to call home before selling your current property. This means you won’t have to live in a rental property until you sell your home or pay moving expenses twice.

On the other hand, you’ll have two simultaneous mortgage payments. This situation can strain your finances and increase your overall debt, especially if selling your home takes longer than expected. Additionally, this approach can limit your flexibility and options during the negotiating process, as you may be more desperate to sell to avoid the financial burden.

Selling Before Buying

When you sell your house before buying a new home, you alleviate the stress and financial anxiety of paying two mortgages at once. This avenue lets you clearly understand your financial standing and the money available for your next purchase. You can take your time and consider your buying options without feeling rushed or pressured into making a hasty decision.

However, you may need to find a temporary living arrangement. Some rental properties may not offer month-to-month payment plans, and if they do, it might be more expensive than signing a long-term lease. You’ll also have to factor in paying two moving expenses and a monthly storage unit fee to house your boxes.

To avoid this situation, you could ask the buyer to accept a rent-back agreement, where you agree to rent the property back from the buyer for a specified period after you complete the sale. While a rent-back agreement eliminates the need for immediate relocation and allows you to live in familiar surroundings, you’ll still have to pay rent and follow the terms and conditions outlined in the agreement.

Tips for Buying and Selling a Home at the Same Time

Consider the following tips to help facilitate the process of selling and buying a home at the same time.

Assess the Local Housing Market

The state of the local real estate market is usually the biggest factor in determining how to sell your house and buy a new one. First, find out if your current and prospective home is in a buyer’s or seller’s market:

• Buyer’s market — There are more homes available than people looking to purchase. You’ll typically have an easier time finding a new home than selling your current property in this market.
• Seller’s market — There are more buyers than homes available. In this market, you'll likely sell your home quicker than you can find a new one.

When selling your home, study recent sales data, average time on the market, and the demand for similar properties. This information will help you set a realistic selling price and timeframe.

For buying a home, identify your desired location and the type of property you seek. Additionally, research the local market to understand price ranges, amenities, and other relevant factors that may influence your decision.

Financial Considerations

Calculate your budget by assessing your current savings, income, and any additional funds available for down payments, closing costs, and moving expenses. This will help you determine the price range for both buying and selling a home.

If you currently have a mortgage, analyze its terms, including the remaining balance, interest rate, and any penalties for early repayment. You should speak to your lender to see if there are any implications for selling your home before the mortgage is fully paid. Additionally, review your credit report since a good credit score is crucial for securing favorable mortgage rates and loan terms for your future home.

Finding the Right Real Estate Agent

Working with an experienced real estate agent is vital when buying and selling a home simultaneously. Look for an agent with a deep understanding of the local market, strong negotiation skills, and a proven track record in managing dual transactions. They will guide you through the entire process, from listing your current home to explaining the steps in buying a house. With their assistance, your agent can help you navigate potential pitfalls and maximize your chances of selling your current home quickly while securing your dream home.

Timing and Scheduling

One of the most critical aspects of buying and selling a home at the same is coordinating timelines effectively. Begin by discussing your plans with the agent to align your expectations. To develop a realistic timeline for your home buying and selling process, consider market conditions, average listing times, and inventory availability in your desired area.

You may also want to consider selling your current home before making an offer on a new one to minimize the risk of being caught between two transactions. However, if this isn’t possible, explore options to make the transition easier, such as a rent-back agreement or bridge loan — a short-term loan that helps bridge the gap between selling your home and buying a new one.

Making Offers and Negotiating

Once you’ve found your dream home, it's time to make an offer. Consult with your agent to determine a competitive but reasonable offer price based on market analysis. Be prepared for potential negotiations, especially in a seller's market. Flexibility and compromise are key during this stage, so when negotiating, consider contingencies that protect your interests, such as a home inspection or mortgage approval contingency. Your agent will help you navigate the negotiation process and achieve a successful outcome.

Managing the Transition

You can do a few things to ensure a smooth transition between selling your old home and buying a new property. First, work closely with your agent to coordinate the closing dates of both transactions. If that's not possible, make sure you have a plan for temporary housing so you have a place to stay during the transition period.

On the agreed-upon dates, complete the sale of your current home and purchase your new one. Work with your real estate agent, legal professionals, and financial institutions to finalize the transactions. This will involve inspections, signing legal documents, and transferring funds if required.

Once the sale and purchase are complete, it's time to move into your new home. Plan and organize the logistics of the move, including packing, hiring movers, and transferring utilities. Once you’ve settled into your new home, don't forget to update your address with relevant parties, such as the post office and your homeowners insurance agent.

Conclusion

Buying and selling a home at the same time is an ambitious effort, but with careful planning and assistance from the right professionals, you can achieve a smooth, successful transition.

No matter where you call your next place home, homeowners insurance is key in protecting your family and new property. It offers financial protection, covers property damage, protects personal belongings, and provides liability coverage, giving you peace of mind when the unexpected occurs. If you’re looking for a new policy, count on Mercury to deliver best-in-class coverage at an affordable rate.

Contact us for a fast, free homeowners insurance quote today!