It can be challenging to sell your house while you’re trying to buy a new one. Do you sell your home first before buying a new one? You don’t want to be left without a new home if your current home sells quickly. Nor do you want your current house to sit on the market while you make monthly payments on it and your next home.
You should never list your current home for sale unless you have a Plan A and Plan B for where you’re going to live after your home sells. It’s best to cover your bases if the timing doesn’t perfectly coincide, and it often doesn’t. Here are some considerations to keep in mind if you’re selling and buying a home at the same time.
Your home might sell quickly and produce high profit in a hot housing market. The downside is that you may have to pay an inflated price for your next home due to strong buyer competition. You also may not have a next place to live.
Knowing the state of the current housing market can help you determine whether you should first shop for a new home or put your current one on the market. The timing is rarely going to be in sync. It’s good to consult a real estate professional to learn what they recommend.
If you close on a new home, can you afford to maintain and pay the mortgage on it and your existing home if the latter fails to sell? If so, for how long?
You might consider adding a contingency clause to an offer for a new home. A contingency specifies that the closing on your new home can’t occur until your current home sells.
Particularly in a competitive housing market, there can be risk in adding a contingency. There may be multiple offers on the home you want to buy that can dilute your chances of having the winning bid.
You could also request an extended closing, which gives you an extra month or two to move into your new home. That may allow you time to focus on completing the sale of your current home.
It’s unlikely that the timing of selling your old home and buying your new home will perfectly gel. That’s why it’s a good idea to have two backup plans for where you’re going to live until you can locate, negotiate a price, purchase and move into a new house. It might be a while.
Here are some options for situations that can occur when you’re trying to buy a house while selling your own.
What can you do if you sell your home and you haven’t found your next one yet?
You might consider requesting a lease-back from the party who is buying your existing home. This involves asking the buyers’ permission to allow you to stay in your old home for a specific period while paying them rent after the sale closes on it.
Consult a real estate attorney before entering into a lease-back agreement. Unfortunate situations can arise such as accidental damages to the home that’s no longer yours and stays that extend past the date you agreed to move out.
You may want to secure a short-term rental property if you’ve sold your home and are shopping for a new one. That means you’ll have to move twice, but it can help ensure that you’re not left on the streets if you don’t have a new home yet.
Be sure to research short-term rental options before you decide to sell and jump on this option. They’re not always readily available for short periods like a month or two.
Let your financial situation and the amount of time you need in between homes guide your options.
Another option is to place your belongings in storage and stay with family, if they’ll have you, until you find a new home.
If your expected interim time is a week or two or so, renting an extended-stay hotel room, an Airbnb or the like is another course of action. It may also be easier to extend your stay beyond what you expected if you need to.
If you’re moving due to a job location change, you may have no choice but to move before the sale on your current home closes.
You may want to consider renting a place close to your new job for the short-term until your home sells. It might be easier to pay your current mortgage and a monthly rental expense in the short term instead of making a down payment and paying a mortgage on a new home too.
If you’re in the process of buying your next home, but yours hasn’t sold, consider taking it off the market and renting it out. If it’s listed with a real estate agent, ask under what conditions you can do this and whether it’s a sound idea.
You might want to apply for a bridge loan that “bridges” the period between the time your home sells and the sale on your new one closes. This loan allows you to use the value of your current home to make a down payment on your next home, if you qualify. After your existing home sells, you can repay what you owe on the bridge loan.
New home communities often have newly built homes for sale that feature relatively short move-in timelines. It can be a good option when you need to move into a new home sooner than later.
Buying or building a new home from a new home seller is an affordable option for more buyers than ever before. Contact Brookfield Residential to get information on new homes in your area.