How to Buy and Sell a Home Simultaneously

Today we’re talking about a common dilemma: how to sell your home and buy a new one simultaneously. Many families don't know where to begin, but are ready for a change. Never fear, we are here to help! We’re laying out the road map for you in this article. 

**If you're not a first time home buyer, odds are that you're going to be buying and selling at the same time.

Once again you’re going to need to talk to a lender! You want to ask them how much you qualify for, with and without selling your current property. This is going to have nothing to do with what you qualified for when you bought your current house, because jobs change, financial status change, & debts change. They're going to let you know what you can buy with or without selling your current house, because owning two properties is a different calculation for a lender than owning one at a time.

What you really want to know is, is it going to be enough either with or without to cover what you want in your next house? Maybe you're able to hold both properties for a short amount of time or maybe you absolutely have to sell the house that you're in in order to get into the house that you want next. With all that being said, you want to find that out right from the get go. We are going to talk through a couple of different options today so that you can be equipped as you think through the best scenario for you.

Scenario One: You have the perfect timing of selling your current home and finding a new home.

Let's talk first about the perfect world scenario. In most people's perfect world, you're going to have the house that you're currently living in under contract. Then you go out and find the house that you want to move to and purchase that one time everything up perfectly so that your current house sells a day or two before or even the same day as the house that you're purchasing and the equity that you're cashing out of your house goes straight to the purchase as your down payment like perfect dominoes. One falls and hits the other and the next one goes and everything goes off smooth without a hitch.

Most people like that option because you're using your current home as your savings bank for your next one. All the money that you've put in over the years that you've lived there becomes the down payment. It significantly reduces your mortgage payment for the next one. So that's why we say it's it's typically perfect world scenario. Now, most of you know that we don't typically live in a perfect world.

Scenario Two: You are able to afford to purchase your next home before selling your current one.

If you can hold both houses, do you want to hold it over for a bit? That’s the biggest question that we're going to ask you as we talk through what's ideal for you and your family. If you can afford to hold them for a little bit of time and we'll talk you through what the market says and how long we think that may actually have to be; that can give you a lot of flexibility in terms of buying your house and getting your new one ready. If you choose to buy before selling your current home then you’re able to move out, get it ready for showings, and put it on the market. That gives you a lot of flexibility there in terms of timing, but it also gives you time to make sure that you can find the perfect house for you, if you're really particular about what your next house needs to look like. If that's going to be a pretty specific type of property, it gives you the flexibility to wait, find that property, make sure that you close on it, and then sell your house when you're done with that.

Scenario Three: You can’t afford to hold both properties at the same time and must your home sell before purchasing another.

If that's your situation, don’t fret, it’s more common than you’d think!  We started off with you holding both at once because that's that's kind of easier and less in-depth to talk about. But this is way more common. Hey, you have to sell your current house to get into the next one. So there's two questions here... Is it more painful to buy your new house under time pressure? Or is it more painful to have to move twice? You need to talk to your realtor to get a good idea of what the current market is like and how quickly they think your home will sell.

Next, have you seen houses in the location that you want and in the price point that you can afford that you like? If the answer's yes, then great! With our expectations being realistic we can move forward with selling your house, and go find another one. If the answer is no, then we might need to do some more research and make sure that expectations are realistic before we move forward; unless you're great with living in an Airbnb or living with family or renting in the meantime, while we take a long time to look.

You Have Options

There is an option to put a contingency when you're buying a new house, that that purchase is dependent on you selling your old house. People do that a lot and it all comes down to what kind of market you're in. If it is a seller's market, there are so many buyers chomping at the bit, it may be a lot less attractive to a seller to have to wait for you to sell your house and have the uncertainty of you not being able to sell it. So that may mean that your offer is significantly less attractive to them and that you may not be able to get under contract with the house that you want to get. Again, it's going to be completely dependent on the market and your agent is going to be able to advise you on that. 

Another question is, do you have an easy place to move? If you did sell your house and you hadn't found the perfect next place, are you able to move in with family? Is there an Airbnb available that would fit within the amount of rent that you want to pay per month? It would be best if you have something that's flexible in terms of timing. That's why we kind of mentioned short term rentals and things like that, so that when the right place does come up, you're not stuck in another lease!

There are also things called bridge loans where you pay temporarily to loan the equity out of the house that you need to sell so you can put it into your next house. There's also a word “recasting”, where once you sell your house, you could kind of put that equity into your new house shortly after buying it. It won't be directly at closing. There are a lot of different options this is something to definitely talk to an agent and lender about. Make sure that you know the best option for you and your particular situation.

How much work does your current house need to sell it?

How long will it take or how much of an investment is it going to cost to get your house up and ready to hit the market? When we list a house, we always recommend some light to medium make ready items to get the most out of your property. This is so that you sell in the least amount of time and for the highest dollar.

Often you can do this while you live there, it's going to be some light painting, fixing things, switching out some light fixtures, whatever that is. There's a lot of small things you can do that make it look a lot more appealing to today's buyers. Sometimes you may need or want to move out to do the work needed. You're going to need to factor all of it into your timing. Doing all of that work, getting photos taken, and all the due diligence in preparing your home and yourself for moving. That way once we find the perfect house for you to purchase and we pull the trigger, we can hurry up and get yours on the market.

Have a Plan B

You know that there are always risks in everything that we do, there are a million different reasons why something could go wrong. We always encourage backup plans, because what we don't want to do is for you to feel so pressured that you have to pull the trigger and you must buy a house simply because your house is selling.

The last thing we want you to feel is that you absolutely have to buy a house, that you were forced to make a quick decision you're going to have regrets later. We want to make sure that we enable you and set you up in the best position to get to that next perfect place, because that's really the goal in all of this, is to get whatever you're looking for in the next place, whether that's a downsize or getting more space. We want to make sure that's right for you in all the different ways that you want.

Are you ready to sell AND buy?

If you're ready for more space for a home office, need a backyard for your pandemic puppy or you're growing your family. Give us a call!  We would love to help you navigate selling your current property and finding the perfect next place.

You can always find all of our information at thecastillogroup.net.

Don't be afraid, you can do this! We want to hear which topics interest you most for upcoming shows. Head on over to WhereWeLivePodcast.com to continue the conversation in our Facebook group, read more blog posts and connect with us!

Thanks for reading!

Brianna & Keelie