Tips for Buying and Selling a House at the Same Time

Multitasking is a skill, but buying and selling homes at the same time is the ultimate balancing act. If you are still paying off the mortgage on your current home, but you buy a new house before selling, you can end up financially responsible for the costs of both properties. But selling your home too soon before you have secured another will leave you with nowhere to go once the sale closes.

Though the timing can be tricky, with the right planning, financing, and some strategic pricing, it is possible to time a home sale and purchase in a way that works best for you. In this article, we will outline some strategies you can use to ensure that your timing is on point when you are buying a house and selling at the same time.

How to buy and sell homes at the same time

The key to buying a new home while selling your current one is timing, and a little bit of luck. While it may be impossible to control every aspect of the buying and selling process, there are a few steps you can take to set yourself up for smooth closings. 

Step One: Research the current housing market

A huge factor that will affect the timing of your home purchase and sale is the current state of the real estate market in your area. Though it is not something that anyone can control, understanding what kind of market you are in will help you determine the best timeline for your homebuying goals. It is important to note that real estate markets can vary depending on the areas you are buying and selling in.

In a seller’s market, you will have an upper hand selling your home at a top notch price, but it may be more difficult to purchase due to competition with other buyers and bidding wars. This means you can be more selective when it comes to accepting an offer. If you take the time to stage well and properly price the property, you will likely be able to sell it quickly. However, you will also need to be ready to move fast on buying your next home.

On the other hand, in a buyer’s market you may experience more struggles selling your house due to a lack of demand from buyers, but finding a home will be much easier as other sellers are also eager to sell. In this instance, you may have to pause making an offer until you have a contract with a solid buyer for your current residence. It will also be important to consider including a contingency that voids the deal if the sale of your home does not go through in any offers you do submit.

Understanding the market and where you stand as both a buyer and seller will help you determine the best game plan for the process.

Step Two: Evaluate and align your finances

In an ideal situation, you may be able to have concurrent closings within a few days of one another. Possibly even the same day. It is possible that things will not go according to plan. You may find yourself selling before you have been able to secure your next home or vice versa. That is why it is important to have all of your financial ducks in a row as soon as possible. Before and during the process, you should be keeping close tabs on your overall budget and credit score. Making large purchases and taking on more debt can have a negative impact on your credit and make it difficult to secure financing.

It is also vital that you pay close attention to the contingencies you are including in both the sale and purchase contracts. If you know you cannot handle two mortgage payments if you are unable to sell before you buy, having a contingency in the real estate contract will provide an escape route. It is also worth considering a financial contingency if the approval of a new home loan relies on the sale of your current house.

Step Three: Find the right real estate experts 

Building your homebuying (and selling) dream team will go a long way in reducing your stress during the process. This team should include the following experts:

• A real estate agent

• A real estate attorney

• A trustworthy mortgage lender

• A home inspector

• A home insurance agent

• A home appraiser

It will be crucial to have seasoned professionals guiding you through the process, given all of the paperwork and actions required to sell and buy homes.

Step Four: Get pre-approved for financing

An incredibly important step to setting yourself up for success is securing pre-approval for a new mortgage. You will want to take your time comparing rates, types of mortgages available to you, and lenders so you can obtain the best possible terms.

You may want a pre-approval letter from your chosen mortgage lender in order to show sellers you are a serious buyer and to understand how much home you can afford.

Step Five: Always have a backup plan

No matter how well you plan and prepare, it is normal for unwanted surprises to pop up during the buying and selling process. Whether your timeline is thrown off course or a contract falls through, things happen. If you have taken the time to understand and include mortgage contingencies in your sales contracts, you will likely be protected and have the ability to reschedule closings accordingly or walk away from a deal with minimal financial drawbacks. However, contingencies should not be your only backup plan. Here are some tips you can use to ensure you have a safety net no matter what happens:

1. Have a short-term rental or living option on standby in case your home is sold before you are able to buy a new one. You will need to factor in possible rent and moving costs, along with storage unit options if you cannot bring everything to your temporary home. You may also have to consider residing with family or friends until you have secured your next home.

2. Plan for emergency funds in case you buy your next home before you are able to sell the current one. In this case, you will be responsible for paying two mortgages. One option you may want to consider is using a home equity line of credit (HELOC) to cover the costs until a sale is finalized.

3. Consider renting out your old home if you have closed on a new one. Rental income can help offset the costs of the old mortgage and give you extra time to sell the property.

Just remember, you got this

Buying and selling homes is an incredibly personal journey, and there is no one right way to get it all done. However, with a good strategy and ample planning, you can accomplish both at the same time. Working with an experienced real estate agent and a trusted mortgage lender will go a long way in helping you obtain homebuying and selling success.