If you’re a homeowner looking to buy your next home, then you’ll probably have to juggle selling and buying at the same time. In an ideal world, you would close on both homes on the same day, but that is rarely the case. Wait for a while selling your house and buying a new one – or vice versa.
In this Redfin article, we’ll lay out the steps for buying and selling a house at the same time. That you are watching Homes in Indianapolis, INor to Dallas, TXHere’s how to sell and buy a home at the same time — and what to expect along the way.
Sell or buy first: Which option is right for you?
The first step is deciding whether to buy or sell first. Ultimately, the best approach depends on your financial situation, risk tolerance, and housing market conditions. Here’s what you should consider:
| Sell first if: | Buy first if: |
| You need a income from the sale of your home with a down payment on your next home. | You have it adequate savings or financing options (such as a HELOC or bridge loan) to cover the down payment before the sale. |
| You want to avoid the risk of paying two debts simultaneously. | You want to avoid stress to find temporary housing. |
| You are in a buyer’s marketwhere houses take longer to sell. | You are in a seller’s marketwhere homes sell quickly, and you may have a hard time finding a new home. |
Understand your local housing market
You’ll also want to explore the area housing marketas it may influence your decision to buy or sell first. If you’re moving to a new city, the real estate market may be different, so you’ll need to time marketing your home properly. Understanding that you are in a a buyer’s or seller’s market it can help you choose where to start.
Is it a buyer’s market?
A buyer’s market means that there are more homes for sale than buyers. As a buyer, you will likely have many options and bargaining power. However, it may take longer to sell your home than you expected.
Options to consider:
- Home sales status: It allows you to back out of the purchase if your current home doesn’t sell. Useful if you rely on money from auctions.
- Extended closure: It gives you more time to sell your home before finalizing the purchase.
Is it a seller’s market?
A seller’s market means there are more buyers than homes for sale. As a seller, you will probably have an easier time selling your home. However, you may find it difficult to buy a home in this market.
Options to consider:
- Payment emergency: It is used when you have accepted an offer on your home but need the sale to close before making a new purchase.
- Rental agreement: It allows you to temporarily rent your home to a new owner, giving you more time to find your next home.
If you’re not sure where to start, contact a real estate agent who understands your local market and can guide you based on current conditions.
Buying a home before selling: Tips to help
Determine your financing options
Before you buy your next home, it’s important to decide how you will finance your purchase. There are several ways to finance your next home purchase if you can’t use the proceeds from your house sale. Other common financing options include tapping your savings, a home equity line of credit (HELOC), and a bridge loan.
Use your savings
You may have enough savings to cover the down payment, which can make it easier to buy a new home before selling. Remember that you will also need enough money to do so closing costsadditional fees, and shipping costs.
Use a home equity line of credit (HELOC)
For many homeowners, their savings are tied up in their current home as “equity.” A home equity line of credit (HELOC) allows you to access your home equity so you can pay for your next home purchase. If you qualify, this may be a good option to consider.
Use a bridge loan
A bridge loan is a short-term loan that allows you to cover down payment costs until the home closes. Some banks offer this loan, but not all, and it can be difficult to qualify.
Consider home selling emergencies
Including a sale at home emergencies your offer allows you to get out of the home sale if your current home doesn’t sell. In other words, buying a new home depends on the sale of your old home.
Request an extended closing
An extended closing gives you more time when you are close to selling your old home. It can give you enough time to coordinate the sale of your home while you buy a new one.
Rent out your old home
If you’re not close to selling your home, consider renting it out. Depending on market conditions, this can be a good idea to help reduce the cost of owning two homes.
Selling your home before buying: Tips to help
Arrange temporary housing in advance
Whether you want to negotiate a lease, find a short-term rental, or stay with family or friends, it’s best to decide where you’re going to live before listing your home for sale.
Consider a rental agreement
A rental agreement a short-term rental where you rent your old home to new owners once the sale is complete. This allows you to have more time to buy your next home or complete the sale if you are already in the buying process.
Ask for an extended closing date
You can also request an extended closing date when selling your home. This gives you more time to find your next home and ensure there is no overlap when the sale closes and you need to move. Keep in mind that this works best when you’re close to making an offer or starting the closing process on your next property.
Understand your shopping budget
If you plan to use the proceeds of your home sale to finance your next home, it’s important to come up with a budget ahead of time. You may have a number that you would like to sell your home for, but that may not be true. Determine your budget range in advance and price your home accordingly.
Is it better to buy or sell your home first?
It is up to you and your circumstances whether you sell your current home or buy a new one first. There are pros and cons to both, but understanding your finances, determining a timeline, and working with a skilled real estate agent can help make the process much easier.
Frequently Asked Questions about buying and selling at the same time
Can I use the same estate agent to sell and buy?
Using the same agent can make communication and negotiation easier, but if you’re moving to a different city, a local expert in your new area may be more beneficial.
How do I make an offer on a new home without the proceeds of selling my current one?
You can include home sale contingencies, negotiate a longer closing period, or use a HELOC or bridge loan to finance the purchase temporarily.
What happens if I sell my home but can’t find a new one in time?
If you’re a first-time seller but don’t have a new home planned, you can consider a rental agreement, subletting, or staying with family or friends while you continue your home search.
How do I spend time selling and buying to avoid paying two bills?
To reduce the pile-up, you can negotiate an emergency foreclosure, ask for an extended closing, or use a bridge loan.
