Selling and buying a home at the same time can be complicated. But there is definitely a strategy to it and with your Realtor’s help, it doesn’t have to be completely overwhelming. Just a tiny bit overwhelming. Come on, let’s be honest! It ain’t a walk in the park.
Step number one: get preapproved for your mortgage. Hopefully you are selling your home and making a nice fat profit. But you still need to get approved for a loan on the next property unless you will be paying for it with cash from the proceeds of the sale of your existing home. You need to know what your interest rate will be, how much you will need to put down, what type of loans are available to you, and what your budget is. Can you go FHA or VA, or does it have to be Conventional? Can do you a 15 or 20 year loan? Can you put 10% down and put the rest in the bank for a rainy day? These are things your lender can tell you when you fill out an application.
You also need to know whether your existing home MUST sell in order to qualify for the mortgage on the next home. Many people are surprised to learn that they qualify for the loan on the replacement property, even if the first house has not yet sold. This can alleviate a lot of stress so it’s important to find out at the beginning of the process. Just be aware that you may have to make dual house payments for a few months if the existing house takes a while to sell. But if you can buy your new house and move in before selling the existing house, you won’t have to deal with keeping the house clean all the time, won’t be inconvenienced with showings, and won’t have to time it just right so that you’re not homeless for two weeks after your house sells!
The logistics can be the stuff nightmares are made of. Do you want to try to close on both houses on the same day? What if you don’t close on the new house for a couple of weeks, where do you put all of your stuff, in storage? Where do you live in the meantime? Are you able to stay in the existing house and rent back from the new owner? There’re a lot of details to work out so if you can buy the new house without having to sell the existing house, it can make your life much simpler. Selling and buying a home at the same time can be done but it’s much easier if you can buy first and THEN sell.
Step number two: List your home for sale with a competent professional. Find out what your home will realistically sell for and how much profit you stand to make. Knowing how much you will have to put down on the next property is obviously extremely important. Do not use a Zestimate or other online value estimator. Rely on a local expert who knows the market trends to give you accurate advice. Find out what your home is worth by clicking here.
Step number three: start looking at new homes online ONLY. Once your home is on the market it can be very tempting to run out and start looking at new homes. Unless you do not need to sell home A to buy home B, resist the temptation. You might drive by homes that look good online to see if you like the area, but going inside and falling in love with one is very risky. Wait until your home is under contract before making an offer on anything else.
It’s also advisable to wait until your buyer has done all of their due diligence, meaning they have had their inspections done and the appraisal has been done. There is nothing more heartbreaking than writing an offer on a new home, only to have to cancel a week or two later because the buyer for your existing home backed out. Especially after you’ve spent $400 on a home inspection and $450 on an appraisal.
It also gives you more leverage when writing an offer. If you tell a seller, “I will offer to buy your home but I have to sell my house first”, it is not a terribly attractive offer. This is called a contingent offer because it’s contingent upon your house selling. Many sellers and do not even want to accept a contingent offer because the likelihood of it falling out of contract is pretty high. If your house does not sell, you will have to cancel on the purchase of this home.
However, if you can say that your house is already under contract and the buyer is through the inspection and appraisal contingency periods, that is much more attractive. The down side is that you may and up having to make temporary living arrangements for a few weeks. If the buyer on your house is scheduled to close on January 1, for example, and you do not write an offer on your next home until December 20, you probably would not close on the new home until mid to late January. Refer back to the idea of renting back from the new owner or putting your things in storage and living in a long-term hotel or with a friend or family member. Or see if you can negotiate a longer contract period when you get an offer on your house.
Step number four: negotiate offers on your existing home. When offers start arriving on your existing home, they will probably offer to close in 4 to 6 weeks. See if you can get them to agree to a longer timeframe, such as eight weeks. This gives you time to find a replacement property without being homeless after your home closes. Let’s say they ask for 10 days for inspections and 21 days to get financing approval. You could wait until the 22nd day to write an offer on your new home and assuming you get it under contract, you’d still have 5 weeks to close. You could close on both houses on the same day.
Step number five: move toward closing! You are now in contract with a buyer for your home, as well as in contract on a new home. It is very possible to close on both houses on the same day. In Georgia we use a real estate attorney to coordinate and facilitate real estate transactions. You can close on the existing house and close on the replacement house immediately afterwards as long as all of the money changing hands is at the closing attorney’s office.
Your Realtor will need to coordinate with the other Realtors as far as the timing. If everyone has a little flexibility on their moving days it will ease a lot of stress in case anything takes longer than planned. The last thing you want is someone freaking out that they can’t move into their house because you had to close a day later.
So I’m here to tell you that it can be done, and it is done all the time! Is it simple? Nope. Is it stress free? Sometimes it is and sometimes it’s challenging, but with the help of a good agent selling and buying a home at the same time does not have to cause you to lose 10 pounds and gain lots of gray hairs. Plan it right and you’ll be moving into your new home in no time!
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About the Author: The article above, Selling and Buying a Home at the Same Time, was provided by Karin Carr, an authority on Cherokee County real estate and a leader in the field of real estate blogging. Karin has helped literally helped almost 200 families buy and sell homes since 2005. If you are in the market to BUY or SELL a home, she can be reached via email at [email protected] or by phone at 404-855-1807.
If you need help buying or selling outside of the Atlanta area, I can help you find a great Realtor®. Just ask!
Are you thinking of selling your home? I’m very good at marketing homes to sell quickly, and for more money. If you’re a first-time home buyer then you’ll be in good hands. I’ve helped countless first-time home buyers through the entire process of buying that first home! I have a real passion for helping folks buy and sell homes here in the great state of Georgia and I would love to connect with you!
I help people buy and sell real estate in the following north Georgia cities: Acworth, Ball Ground, Canton, Kennesaw, Woodstock, White, Roswell, Milton, Alpharetta, Dallas, Powder Springs, and the surrounding areas.