Selling a house is already a big task and if you add buying a house to that equation, it would seem overwhelming to an average person. Ideally, you would want to be able to sell your house, get the built-up equity for your down payment, and then look for your next home. But more often than not, you’ll find yourself selling and buying a home at the same time. But don’t worry, we got you covered. In this article, we’ll discuss challenges and excellent tips on selling and buying a home to avoid making mistakes that can cost you time and money.
- 1 Is selling and buying a home at the same time doable for first-time home sellers?
- 2 How to sell house and buy at same time
- 3 Tips for making selling and buying a home a less stressful experience
- 4 Should I sell my house first before buying another one? Or should I buy first before selling?
Is selling and buying a home at the same time doable for first-time home sellers?
Yes, it is possible. Selling and buying a house at the same time can be done even if it’s your first time to sell a home. However, it comes with several challenges that you should know of.
You are likely going to use the proceeds from selling your home to pay off the mortgage and then use any remaining money for down payment on your next home. But if you are selling and buying a home at the same time, you might have difficulty coming up with the money for a down payment unless you have a lot of cash on hand.
Available options for you (if you don’t have enough cash on hand) are to cash out refinance on your current property, get a home equity line of credit (but they come at a cost and may not work for some), or you can also sell your home to a cash home buyer where closing can be done in just 10 days. Selling to a cash buyer expedites the process and you’ll get the cash to buy your new home in no time.
There are a lot of things involved in both the selling and the buying process of buying a home. It would be less complicated if you can use the same agent to both sell your current home and buy your next one. But this is usually only possible if you are moving within the same city. If you’re looking for a house in another area, you’d need another real estate agent who is knowledgeable of the area you’re moving into. In this case, you have to work with two real estate agents at the same time.
You would want to work with a good real estate agent when selling a house and buying a new one to save yourself from headaches of dealing with complicated logistics such as negotiations with the buyer and the seller, timing the purchase and the sale, to mention a few.
Risk of getting ousted by a non-contingent offer
You may want to buy a house contingent on selling yours to reduce risk which means you’ll buy the house only if you get to sell your current home. It will protect you from taking on two mortgages. A contingency clause will be included to the terms of the home offer. While contingency gives you protection, it also puts you at risk of having your offer declined in favor of a non-contingent offer. While you can choose to remove your contingency in this scenario, it is risky and not financially feasible for you.
Negative Domino Effect
There are times when both the buyer and the seller are buying and selling at the same time and since both parties involved are moving with their own set of timeframe, contingencies and contracts, there’s a higher probability of the deal falling apart.
How to sell house and buy at same time
As previously mentioned, selling and buying a home simultaneously can be difficult. This is especially true when you go for a traditional home sale. Even with an agent it can be a complicated process. You need to have the right timing for the two transactions, negotiating with the buyer for a later closing date and making sure your lender works quickly to experience no lag time between sales.
The good news is there are other options and with the right resources you can do it without the help of an agent. Assuming that you’ve already found the home you want to buy, here’s how to buy and sell house at same time:
- Find a reputable local real estate investor in your area who buys homes for cash quickly.
- Get a ballpark cash offer in 24 hours. If you’re selling a home in Cincinnati, you can request for a ballpark offer here. You are free to decline or accept the offer. If you do accept the offer, you’ll get to pick the move date, which is very beneficial when juggling multiple transactions.
- Make an offer on the home of your choice.
- Schedule closing dates for both of your transactions simultaneously.
Tips for making selling and buying a home a less stressful experience
- If you are going the traditional way of selling a house, then you should work with an experienced and knowledgeable real estate agent who has a good track record juggling both transactions.
- Set a reasonable price for your home.
- Know what type of market you are in (Is it buyer’s market? Or a seller’s market?). This way you have the right expectations before listing your home for sale or shopping for your next home.In a seller’s market where there are more buyers in the marketplace than there are houses what you can do is:
- Write an offer with a settlement contingency
- Request for a rent-back agreement
In a buyer’s market where there are more houses available than buyers, what you should do is:
- Ask for an extended closing
- Write an offer with a sale contingency
- Once you know the type of market you are in you can now make a specific action plan.
- Make sure you have enough funds on hand in case there are any unexpected costs.
- One excellent tip is to time everything so you can avoid contingencies. Once the property you’re selling is ready for closing, you can delay the closing and make an offer to buy your next house without a contingency to sell. When the buyer for your house is fully approved by the lender, you can almost be certain that the sale will push through.If you together with your agent are confident that the sale will go through, what you could do is to delay the closing to coincide with the date you close on your next home, given that the buyer also agrees to delay the closing. But because you are going in with no contingency even if the buyer doesn’t proceed to buy your home, you could still be obligated to buy the home.Take note that banks can take up to 2 to 3 days to transfer funds so make sure not to schedule your closing on a Friday and pick morning hours. This way, you have a buffer to close on the date you wanted and planned.
Should I sell my house first before buying another one? Or should I buy first before selling?
If selling and buying a home at the same time is a little too much for you, you may want to do one thing before you do the next. So the questions now are: Should you be buying a house before selling? Or should you be selling a house shortly after buying?
To answer those questions, it’s better to know the pros and cons.
» EXPLORE MORE: Challenges of Selling House in Cincinnati
Buying first pros and cons:
Pros – The clear advantage of buying a house first is you don’t need to think about where you’ll live when you sell your place. You also don’t have to move twice so it’s more convenient and budget-friendly. Moreover, you don’t need to pay multiple months of rental just to live there for a month since most don’t allow month-to-month rentals.
Cons – The most concerning disadvantage is you having to make two mortgage payments at once in the case that your old home isn’t sold (yet). It might also be harder for you to get a new loan while making payments on your old mortgage and because you’re in a tight situation you might end up accepting a lower offer on your home.
Selling first pros and cons:
Pros – The biggest advantage of selling first is that you won’t need to pay two mortgages. Also, it will be easier for you to qualify for the new home mortgage since you don’t have an existing mortgage on your name.
Cons – First, you could find yourself without a house for an extended period of time. You also need to spend more on storage and moving costs. Another possible disadvantage is you may end up spending more on your next home if home values increase in the area.
Do I pay taxes if I sell my house and buy another?
The answer depends on how long you owned and lived in the house before the sale and how much your profit is. If you owned the home and lived in it for 2 of the 5 years prior to the sale, then up to $250k of profit is tax free.
It doesn’t matter if you sell first and buy later, buy first or sell later, or feel confident enough in selling and buying a home at the same time, if you’re in Cincinnati you can make the process easier by selling it to local real estate investors, Matt and Mitch. Get a ballpark offer here.