What You Need to Know About Buying and Selling a House at the Same Time
In a perfect world, real estate deals would be timed perfectly, enabling a buyer to sell their existing property just as they purchase a new property. This would prevent the hassles and stress that plague so many of these transactions. Hassles like selling too soon and having to pack up and move twice. Stresses like selling too slowly and having to decide between losing a dream home or carrying two mortgages at the same time.
For people who want to know how to time it right to sell and buy a house at the same time, here’s the bad news: you probably can’t. There are just too many variables at play that can’t be controlled by the buyer or the seller.
On a broader scale, the local housing market will dictate how quickly the existing property may sell and how much pressure there is to purchase a new property as quickly as possible before another buyer makes an offer. Then, there are the many factors that impact both sides of the transaction, making a seemingly simple process quite complicated. After all, a buyer who needs to tap into their home equity to cover their down payment, or who can’t qualify for two mortgages at once, must sell their existing home in order to purchase their next one. Other variables that can delay a purchase or sale include the condition of both of the properties and what their inspections uncover, the property appraisals, and title issues.
If any one of these variables causes a delay, a rescinded offer or nullified contract, both your new home purchase and your existing home sale are in jeopardy. Trulia found the rate of real estate transaction failures is climbing, rising from 2.1 percent to 3.9 percent in just one year. The cause? Those pesky variables that ruin the party. Even the most desirable properties aren’t a slam dunk. Things happen and deals fall through, making selling and buying a house at the same time elusive.
The good news is there are options. Buyers don’t have to hold their breath and cross their fingers in hopes that the timing goes perfectly.
3 Steps for Buying and Selling a House at the Same Time
The chances of you selling and buying a house at the same time are rather slim. But, there are definitely things you can do to close the gap between those transactions or at least reduce the stress associated with them. The key is to plan ahead. One of the biggest mistakes people make is to throw their house on the market without really being ready or searching for a home without any real plan on how they’ll sell their existing one. Here are the 3 steps you should follow to make real estate transactions as smooth and hassle-free as possible.
Step 1: Get Ready
Before you do anything, get your existing property in order. That means cleaning out, decluttering and updating as much as your budget will afford. Get rid of anything that doesn’t absolutely have to be there. The goal is to enable your prospective buyers to envision their own things in your house. If it’s packed with personal belongings, bulky furniture, odd furniture arrangements, or items that only clutter, your home will seem smaller with fewer possibilities.
Similarly, you want to put your home in its best light. Make modest investments into high-return projects, particularly in the kitchen and master bath. This may involve simple projects like modernizing light fixtures, faucets, cabinet hardware and shower curtains. Or, it can mean going a step further to replace old countertops, redo landscaping or give your home a fresh coat of paint.
While buyers consider these cosmetic investments a nice-to-have, a home without any major inspection issues is a must-have. Unexpected issues found in home inspections are notorious for delaying real estate deals or making them fall through. Go ahead and get your home pre-inspected after you’ve given it some elbow grease. A pre-inspection will remove any surprises later on when you have an offer on the table and give you a chance to make repairs now.
Finally, do your homework. Know the housing market where you want to buy, pinpoint the neighborhoods where you want to search, and run the numbers so you know a realistic price range you can afford. You can hire a real estate agent to help or do it yourself if you know where to look, like the MLS. Determine your must-haves and deal-breakers so you can narrow your search and save time. You want to be ready to make an offer quickly in case you get a solid offer on your existing home.
Step 2: Secure Financing Ahead of Time
Securing financing can take time. You can often get preapproved for a mortgage before you even start looking for another house. A preapproval sweetens your offer, showing the seller you are serious and are likely to secure financing. It also speeds up the process so you aren’t waiting on a lender to approve you once you’ve made an offer.
For an even faster route, consider getting approved by Homeward. Unlike a traditional lender, Homeward values your existing property during their approval process and uses their cash to buy your new home before you sell your old one. That means you can make an all-cash offer, eliminating the need for appraisal, financing or home sale contingencies. It closes faster and reduces costs. All you pay is a 1.9 percent fee that can be rolled into the purchase of the new home. You can buy your next home and take your time selling your old one if needed. It may not always be as cheap as selling and buying a house at the same time, but it removes the hassle and stress out of the transaction so you can relax. Your all-cash offer may also help you get a discount from the seller or win your dream home.
Step 3: Be Prepared to Negotiate
One of the definitions of “deal” is “an arrangement for mutual advantage.” A real estate deal is just that – both parties engage in an arrangement that provides benefits for each. You may have to give a little to get a little. That’s the nature of negotiations. If you find a house you love, you may want to consider reducing the asking price for your existing home to attract more buyers. Of course, if you use Homeward, you can take your time selling it and ask for the highest price you think you can get.
Other things you may need to negotiate are repairs on your home and the home you want to buy. Even with a pre-inspection, your buyers may request certain repairs you didn’t already make. You’re also dealing with the inspection report for the house you want to buy. Not every issue found on the inspection report has to be repaired by the owner. Hopefully, most are inexpensive repairs that won’t delay the deal. But, if larger problems are found, you may need to start negotiating. You or your seller may be willing to reduce the asking price to cover the cost of a repair rather than making the repairs before closing, which can delay the transaction. Be smart. Digging in your heels over a $2,000 repair may result in the deal falling through, costing you much more in the long run.
While you may not be able to time the sale and purchase of your existing and new homes at precisely the same time, you can make the gap more tolerable. By following the steps above, you will be ready to make and receive an offer with minimal delays. Plan ahead and do everything you can before you jump into the real estate market. Your preparation will be rewarded with smoother transactions.