Recently I had someone visit an open house I hosted who had an important concern many home sellers express. They were concerned about the process of selling their home at the same time as buying another. They asked, “What if our home sells before we find our new one?”
I’m going to walk through the pros and cons of different scenarios for how this could go. It’s important to keep in mind that every transaction is different, and something unexpected could always come up with the potential to change the outcome. But knowing the advantages and disadvantages of each situation can help you decide which strategy best suits your situation and personality.
1) Planning to close both transactions on the same date (home you’re selling and home you’re buying)
- Eliminates the need to find temporary housing
- Prevents your furniture from having to be moved twice: saves moving costs and decreases the chance for damage to items
- There is the possibility for something to go wrong in either transaction, which could change either closing date or prevent a closing from happening altogether
- By having the pressure to keep both closing dates the same, you are limited in your buying options to what’s available only during that time and you may have to settle for your new home instead of finding one you are in love with
- If the other party in either transaction is aware that you’re trying to meet two closing dates on the same day, it’s possible that the other party could leverage this fact and use it against you in negotiations
Advice: It’s possible for this scenario to play out where both closings occur on the same day as according to plan. But it’s important to approach this situation knowing something may happen to change the outcome. Ask yourself if you can handle the stress that the outcome may be different than you expected or if one of the next scenarios I explore would be better suited for you. Also, a REALTOR® and an experienced mortgage lender are invaluable to help with this process.
2) List your home and close, then move to temporary housing
- More time to explore options for your new home
- Ability to rent beyond the closing date of new home, which allows more time to prepare your the new home and move at your convenience
- You won’t have the stress of of relying on two properties closing on the same day
- It prevents the other party from having leverage in negotiations as mentioned in the first scenario
- Will give you more negotiating leverage on the home you purchase
- You will have to move twice
- Incurring more moving costs
- Adjusting to living in a smaller house rental or apartment could be a challenge for people who have a larger family
- Can be problematic to find a rental when you have pets because some rentals won’t allow them, or have restrictions on the size and breed
Advice: This situation could be more ideal than the first scenario if you are stressed about finding a new home you will love in a shorter time period. If you are worried about the task of finding a rental, that’s something a REALTOR® can help you with as well. I am happy to help my clients with finding temporary housing for the time period between their moves.
3) Buy first, then sell your current home afterward
- No need for temporary housing
- Essentially no time constraint for finding your new home
- Gives more negotiating leverage with the seller (for example, most sellers in a seller’s market are hesitant to accept the contingency of selling another property)
- You’re able to move belongings to your new home, vacating the home you need to sell. This allows you to do necessary repairs which could help you earn more profit in the marketplace.
- You have to be financially capable of doing this
- Your old home may take more time to sell than you anticipated. If you have a mortgage on that property, you could potentially have two house payments for longer than you planned.
Advice: Talk with a REALTOR® to begin the process of preparing your home to sell, competitively pricing the home, and designing an effective marketing plan. Seek their advice for a qualified mortgage lender. This way you have advice and opinions from professionals about what to expect with the sale of your home, and you’re ready to start this process right when you need to.
4) Sell your current home, but with the contingency that you are able to keep possession of your current home until a certain date after the closing
- Allows more time to move into new home
- Not many cons to the seller, but this situation is not attractive to buyers
Advice: This option is not impossible to do, but most buyers simply will not agree to let the sellers stay in the home after it closes. Buyers are apprehensive about the condition the sellers may leave the property in, and then the buyers would have no leverage as they did prior to closing.
These are all just possible scenarios you may find yourself in as you’re selling and buying at the same time. If you’ve decided to start this process but are concerned about how it will play out, it’s important to talk to your REALTOR® to have an idea for what to expect in different situations. It’s much less stressful to go into any of these scenarios with a heads up for what to expect. It’s also important to know which approach to selling and buying at the same time fits your personality and situation best.
If you have any questions about anything I’ve discussed, don’t hesitate to reach out!
Jacqueline Lee, Realtor