How to Navigate Buying and Selling a Home Simultaneously—Without Losing Your Mind, or Money
In Bucks County, we are still in a very strong sellers’ market. With inventory at all-time lows, many sellers are hesitant to put their home on the market without first securing another home. No one wants to find themselves without a place to live!
In an ideal world, you’d buy a new home, move in, and then, when all the dust settles, deal with the turmoil of selling your existing home. But for many people, that’s not financially realistic. Buying first means that moving will be easier, but it also affects your debt-to-income ratio, making it harder to qualify for a new mortgage —not to mention the difficulty of juggling two monthly house payments.
If you are ready to close on your existing home first, store your belongings, and reside in temporary housing, this will put you in the most competitive buying position when making an offer on another home. Sellers and their agents comb through multiple offers looking for the strongest buyer with the least number of contingencies. When you have money in the bank, and no house to sell, your offer gets put on the top of the pile.
Here’s what you need to know to ensure the best success in this hot market:
Education: Choose an agent or team who will educate you on the housing market, both where you live now, AND where you will be purchasing. You need to know the average list to sale prices in order to make sound decisions on a list price, as well as an offer price on the new home. You want to make a competitive bid on the home you are buying without offering too far above the asking price.
Realistic Pricing: Be sure to price your existing home to the market and not well above the average home prices in your neighborhood—you will need to get your existing home under contract before you can make an offer on another home. Since it is a sellers’ market, you are in the driver’s seat when you get offers on your home. Require a long closing timeline from your buyer (90 days or more). This allows you time to find another home, get under agreement and through inspections and appraisals, and strive to close on the new home the same day or day after your current home settles. Thereby avoiding having to carry two mortgages and wasting precious financial resources.
Flexibility Mindset: Some pitfalls of buying and selling simultaneously are: 1) You are not alone in the transaction. There is a buyer for your home, you in the middle of two transactions, and the seller of the home you are purchasing. Our team has helped many buyers and sellers navigate this smoothly, but we do set expectations with our clients that there could be time delays and inspection challenges on both sides. Having a flexible mindset from the start will lower the stress levels when a lender calls and tells you the closing will be pushed off a week, or you need to have repairs made to satisfy the buyer. 2) Lender delays are one of the most common issues we deal with right now, as banks and lenders are busier than ever with refinances and purchases. Unfortunately, they do not always honor the original timeline for mortgage commitments and settlement dates.
Rent-back Options: A seller may be able to rent their current home back from the new buyer. This way, the seller does not need to move out of the home until they are ready to close on their next home. Again, there can be pitfalls here too, as you go from being an owner of the property, to a tenant. This can be a difficult mindset for a homeowner to navigate, especially if maintenance or repair issues arise during the rent-back period. There should always be a legal rental agreement in place to protect both landlord and tenant.
Certainly, selling and buying a house simultaneously can be stressful—but carefully considering and planning for the risks and hurdles can mitigate the stress. I recommend speaking with an experienced agent or team about all of your options prior to jumping into the market. Call us today for a strategy planning session at 215-798-5016, or click HERE!