How to Walk the Tightrope of Selling a Home and Buying a New One
If you are looking to sell your home and buy a new one simultaneously, it can feel like walking a tightrope and can be a scary prospect. As experienced real estate agents, we have worked with many clients who have faced the same daunting task. The good news is, there are plenty of solutions to help navigate this tricky situation and we are here to share them with you.
First things first, let’s talk about the common concerns that sellers who are also buyers usually have: “What if I can’t find a house to buy? What if I can’t sell fast enough? How can I pull this off without getting stuck with two homes – or no home at all?”
These are all valid worries, but the key is to understand the risks involved and come up with a plan that works for you.
Here are the top plans we suggest for our clients who are selling and buying at the same time, the benefits and drawbacks of each, and how we help mitigate the risks involved:
Plan 1. Buy While Selling: This is the most common plan among our clients, but it’s also the riskiest.
Without a contingency clause or special financing, buying while selling exposes you to a lot of uncertainty. However, if both transactions occur quickly, this plan can be less costly. We recommend having safety nets in place and discussing the best plan “B”.
Plan 2. Purchase Contingency. If you find a new home before selling your existing one, you’ll likely need to make your purchase conditional on the sale of your current home, This contingency can be difficult to get since sellers still hold sway in today’s market. Sellers who get multiple bids are likely to choose contingency-free offers, even if they are a lower price than yours.
Plan 3. Sale Contingency. This means you agree to sell your home on the condition that you can find a replacement home within a certain period. You may have an easy time getting this condition; however, some buyers may be reluctant to accept this. It is also worth bearing in mind that given the current market’s low inventory levels, you may find a buyer faster than finding a new home for yourself.
Plan 4. Bridge Loan. For most families, buying a home without a contingency before selling their current one isn’t feasible. The down payment for, and transfer of equity to their next home are not liquid. bridge loans from a bank or other lending institution can solve this by lending cash for your home purchase for a short term, between 6 – 12 months, and is secured by the proceeds of your home sale. Bridge loans are not what they used to be and we at Tend Home Team have partnered with several companies that offer a wide variety of options to buy before you sell.
It’s important to consider all the possible outcomes and be comfortable with each one.
Buying before Selling: Even if a seller had accepted your contingency offer, it could expire, and you’d be back to shopping. Buying before selling has the risk of not selling your home for a lot longer than expected.
Selling before buying: While selling before buying may mean living in temporary accommodations for an unknown amount of time if you are unable to find a home to purchase, it does avoid the need for special financing or paying two mortgages.
But don’t worry, there are alternative solutions to offer, such as renting back your home for an agreed-upon period, between 60 – 90 days, in exchange for a lower price or a rental payment following the completion of the sale.
Sellers who intend to sell their home before purchasing should reject any offer that includes a clause requiring the purchasers to sell their home first. This will shorten the wait and uncertainty between selling and finding a new house.
Short-Term Housing: Even if you have the most advantageous contract on the selling side, you must prepare in advance for a housing gap if you choose this course of action. If you have family members who are willing and able to host you, that’s fantastic. Get in touch with them early so they can be ready if the time comes. Those with large families or those without nearby relatives are typical without this choice and should make other arrangements. Although they are more expensive than a standard apartment, 30-day rentals on Airbnb and similar websites are typically much less expensive than short-term rentals or hotels. Moreover, some apartments could have 30 to 90-day leases. If your agent has relevant experience and connections, they may be able to assist you in settling on one.
Convenient storage solution: These days, services exist to make storing your possessions easier than ever. After selling your home, enlist a company like Cube or PODS. They will come to your old home with a mobile container and later will deliver it to your new home, which means you’ll only have to pack and unpack one time, not two times as with a standard storage unit.
If the stars align, you might not need to carry out your “between houses” plan, but just in case, a little planning will go a long way. We are here for a no-obligation planning strategy.
In short, selling and buying at the same time can be a challenge, but it’s one that we are well-equipped to handle. To help make the process as smooth and convenient as possible, we offer the use of our free moving truck to our clients to help simplify the process.
The truck is available for the day of the move, and it’s an easy way to move your belongings from your old home to the new one.
If you are considering a move. Give me a call today at 206 504 3660 I’ll take the time to learn about your situation and help plot a course for a successful sale and purchase.
Don’t let the tightrope scare you – with the right plan in place, you can land safely on both feet.