Buying And Selling At The Same Time
One question that is often asked when discussing with home owners about listing their property is “Should I put my house on the market before buying a new home or after I purchase?”. And that is a good question since selling and buying at the same time can be a difficult balancing act. But it can be done with the process going smoothly. It is important, however, to have a sound strategy in place and to know the pros, cons and options in each scenario.
Buying Before Selling. Buying a new home before you sell your old one may be the trickier of the two options. However in a seller’s market, like todays in our local area, it may be the best way to go if you have the financial capabilities to do so. You do run the risk, however, of paying two mortgages at the same time, and you may feel pressure to sell your home at a lower offer to avoid this possibility. You also will not know the final selling price of your existing home which may blur how much you have for the purchase. But if you do find your dream home early on in your search, there are options which will provide you the opportunity to make an offer.
The easiest and most popular way of dealing with this scenario is by including a home sale contingency in the offer. This allows a buyer to sell their home first and then buy the new home shortly thereafter. And assuming all goes as planned, the transaction will close. If you cannot find a buyer in time, you have the option to try to extend the contract or to back out of the deal. But, contingencies are sometimes not looked on favorably by sellers and can make an offer weaker since there is no assurance the buyer will actually be able to purchase the home.
Getting a bridge loan is a second option. A bridge loan is a short-term loan that allows you to pay off the existing mortgage so you do not have to carry two mortgages. When the home sells, you pay off the bridge loan. Be careful, though, bridge loans come with strict terms and higher interest rates.
Selling Before Buying. Selling first is typically the more popular route to take and is a more financially secure option. This approach negates the issue of paying two mortgages at once, and also provides you with a clear idea on how much you have to spend on a new residence. However, it is not without its own inconveniences. If you cannot sell and buy on the same date, you may have to move twice, rent storage space, or live with family or friends. And you may have to offer concessions to the seller to match sell and buy dates.
If you cannot coordinate buy/sell dates, there are ways to limit the inconveniences. You can ask for a rent back contingency. This provision allows you to rent your home back from the buyer-now-owner from the time of closing until you are ready to move. But this is a big favor to ask and one the buyer does not have to agree to. In addition, they may be trying to coordinate their own buy/sell dates as well.
You can also try to find a short-term rental to hold you over until it is time to move into your new home. The biggest issue here is cost since short-term rentals are often more expensive than yearly rentals. And you might still have to invest in storage space until it is time to move.
If you have questions regarding a move, contact me. I would welcome the opportunity to meet with you and discuss your concerns and plans; 908-256-9651 or firstname.lastname@example.org.