How to Sell and Buy A Home at the Same Time...
Tips for Selling & Buying A Home Simultaneously
Written by Eriks Draiska, Managing Director of Plaza Real Estate
Every real estate transaction is different in its own way. Some real estate transactions are straightforward, while others are a puzzle and have several hurdles that need to be overcome.
One of the trickiest situations that can exist in real estate is when a person has to sell and buy a home at the same time.
There are many different techniques that can be used to do this simultaneously, just like there’s more than one way to skin a cat!
It’s important if you’re planning to sell and buy a home at the same time, you understand what options you have. And be aware of the potential scenarios that can result.
If you happen to be selling a home for the first time, it’s even more important to be comfortable with the different situations that you may encounter.
What Is The Difference Between Non-Contingent & Contingent?
If you’re in the market to sell and buy a home at the same time, the contingent is a term that you should become familiar with.
Contingent can easily be defined as something occurring only if other circumstances are fulfilled.
In real estate, there are many common contract contingencies, also called ‘subject-to’ conditions that can exist.
If you’re going to sell and buy a home at the same time the one to become familiar with is your purchase is likely subject to the sale of your property.
Understanding the difference between a non-contingent buyer and a contingent buyer is very important.
A non-contingent buyer is someone who is able to purchase a home without needing to sell a property or the requirement to arrange finance.
An un-conditional or non-contingent buyer is the type of buyer that you want to attract when selling your home.
When buying a home, it’s also the type of buyer you’d prefer to be, especially if you’re buying a home in a sellers’ market.
A contingent buyer is someone, who is able to purchase a home, but needs to sell a property or arrange finance in order to do so.
If you’re selling a home, receiving an offer subject-to-the sale of another property is certainly better than receiving no offer, however, it's not uncommon, that an offer that is contingent on selling another property does not end always up settling.
What Are The Pros Of Buying A Home Prior To Selling Your Home?
The time it takes to buy a home cannot be predicted.
Some buyers will find the perfect home on the first day they look at homes and others may take months.
One benefit to buying a home prior to selling your home is that you know you’ve found a home that you want to buy.
If you know that what you’re looking for in a home is not common or easily found, buying a home prior to selling your home could be a good option for you.
Another benefit of buying a home prior to selling your existing home is that you’re able to perform any inspections on your new home.
There are many reasons why having a building inspection is a great idea when buying a home.
Buying a home prior to selling your home gives you the opportunity to walk away from a home if the inspection results are poor without having to feel pressured into buying a home you’re not comfortable with because your existing home is sold and you need a place to live.
What Are The Cons Of Buying A Home Prior To Selling Your Home?
Buying a home prior to selling your home can be difficult as well.
You may be asking yourself how buying a home prior to selling your home can be difficult.
If you need to sell your existing home in order to buy a new home, submitting an offer subject to the sale of your home can sometimes lead to your accepted offer getting ‘bumped.’
Getting ‘bumped’ simply means that a seller receives an offer that is ‘better’ from a different buyer and invokes a '48 hour let-out clause' that requests that you, the contingent buyer either remove the contingency of needing to sell the home or the offer will be null and void. This is the reason buying a home prior to selling your home can be devastating because losing a home that you fall in love with can be extremely difficult.
If this happens, you’ll need a thick skin to deal with it.
Another potential drawback to buying a home prior to selling your existing home is that some sellers will not entertain subject-to-sale offers. This is common for homeowners who are relocating and are using a relocation company. Most relocation companies will not entertain offers that are sale contingent. This can limit the number of potential homes that you’re able to purchase due to your home sale contingency.
Buying a home prior to selling your existing home does give you the extra time to perform inspections and can be a benefit to buying before selling, however, it’s possible you’re wasting valuable dollars on these inspections.
Spending your hard-earned money on the inspections of a home that you may get ‘bumped’ on is an obvious negative to buying a home before selling your existing home.
What Are The Pros Of Selling Your Home Prior To Buying A Home?
Most people who have bought and sold homes in the past will tell you that selling a home is more difficult than buying a home.
A huge benefit to selling your home prior to buying a home is that you know you’ve secured a ready, willing, and able buyer.
This is extremely beneficial when looking for your new home as you will no longer be subject to sale, just subject-to-settlement of your existing home.
A buyer who is not a sale contingent is a much more appealing buyer for sellers.
Another plus of selling your home prior to buying a new one is that you will know exactly how much your home is going to sell for.
This can be extremely important for you as a buyer if you are planning on using the proceeds from the sale of your existing home.
What are the Cons of Selling Your Home Prior to Buying a Home?
If you’re going to sell and buy a home at the same time, it’s critical you hire a top real estate agent who has experience in helping people do exactly this.
The primary reason for making sure you have a top real estate agent and also the biggest drawback of selling your home prior to buying a home is the possibility of having to rush to find a new home.
A top real estate agent can help negotiate not only a longer settlement on your existing home but also attempt to negotiate a rent-back period of your home if required.
If your real estate agent is able to negotiate a rent-back, this can allow additional time for you to remain in your home which can allow you the extra time to find a new home.
Tips to Prepare to Sell and Buy a Home at the Same Time
Get Your Home Market Ready
Before selling your home, it’s extremely important to make sure your home is market-ready.
There are certain things you should do when selling your home for sale!
One of the best ways to get your home market-ready is to get advice from a real estate professional.
A real estate agent who is an expert will know what you should do prior to your home being listed for sale.
They should be able to give advice on what repairs, upgrades, and updates you should consider doing prior to listing your home for sale.
Get Your Finances In Order & Put Some Skin In The Game…
A homeowner who is going to sell and buy a home at the same time need to have their finances in order.
The most important thing to find out prior to selling and buying a home simultaneously is whether you can qualify for a loan without having to sell your existing home.
Many people are unable to do so but if you’re able to, this can be a huge advantage.
When getting a pre-approval for a mortgage, ask the mortgage consultant you’re working with whether buying unconditional or non-contingent is an option or not.
If buying a home non-contingent is an option, but you feel more comfortable buying contingent, consider having the mortgage consultant still issue a non-contingent pre-approval.
This non-contingent pre-approval may be useful in the event you get ‘bumped’ while purchasing a home sale contingent, should you decide you want to purchase the home and remove the sale contingency on your existing home.
Even if you’re unable to purchase a home non-contingent, it’s still extremely important to get pre-approved for a mortgage.
Since a mortgage pre-approval can take a few days to a week or more to complete, having this completed prior to looking for a new home or listing your home for sale is important.
Know Your Game Plan
One of the biggest mistakes that homeowners make who are attempting to sell and buy a home at the same time make is they don’t have a game plan in place.
Below are several questions that you should answer prior to beginning the tricky process of selling and buying a home simultaneously.
- Will I list my home prior to looking at homes that are for sale?
- Will I make any offer received on my home contingent on finding a suitable property for myself?
- Will I find a new home prior to listing my home for sale?
If needed, do I have a place to move should my home sell fast and I haven’t found a new home yet?
If needed, can I afford to put my belongings in storage for a short period of time?
Can I afford to purchase a home that would make it worth selling my existing home?
To sell and buy a home at the same time it’s important to understand exactly what to expect throughout the process.
It’s also vital to have your game plan in place.
- If you think buying a home prior to selling your existing home is the best for your situation, then go for it.
- If you think selling your home prior to buying a new home is the best for your situation, then do it!
- In most situations, we recommend that you sell your existing home prior to buying a new home.
- It generally will make the process less complicated and less stressful for you and your family.
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