How to Buy and Sell a Home at the Same Time Without Losing the Deal

You may be in the unique position where you have to purchase a new home and sell your old property in a close amount of time. This situation can cause a range of financial and emotional problems for second-time homeowners. You are acting as the buyer and the seller while you are trying to figure out how to proceed with both transactions without putting a strain on your sanity or your finances.

Where to Start?

It is time for some serious soul-searching regarding your finances and how you want to proceed. There is no realistic way to sell a property and buy a new one on the same day. So you will have to go with one of two choices: You sell your house first and then search for a property, or you buy a house first and sell your other house a little later.

Selling First

Many people choose the sell option first due to tight finances. It may be right for you if you can't handle carrying two mortgages and paying two property taxes at one time. It can also be harder to get a second mortgage from a lender without paying the first one off. In addition, the sale proceeds from the first property are often used as the down payment, closing costs, and paying for most of the mortgage for the second home. You know how much money you have when searching for a new home.

While selling a property might be an ideal path to take, it does lead to troubles on its own. There is no way of knowing whether you will find a new place quickly. So you have to find temporary housing as well as storage for your items. This issue can be particularly harder on new families or large families.

Buying First

If you decide to go with the buy now and sell later route, this avenue lets you take your time in finding a new place. You can pick out a house without feeling rushed. Also, you can easily move your possessions from one home to the other without dealing with storage or temporary housing costs.

Yet you have to make sure your finances are in order to carry two mortgages. If you are struggling to make payments to your original mortgage, lenders will be hesitant to offer you another, especially since you are carrying a higher debt-to-income ratio that they use to determine your eligibility.

Tips to Make the Home Buying and Selling Process Easier

Check out the Current Real Estate Market

You need to understand what the current real estate market looks like not only at the location where you are selling your existing house but also at the location where you are searching for a new one. Hiring a real estate agent to perform market analysis can help ease the process. You may have to hire two agents, a seller's agent and a buyer's agent, if you are doing a cross-country move.

Understand your Financial Options

Take a microscope to your finances and figure out whether it is better to sell your old home first or to buy a new one first. Since you already know what the current real estate trends are, you can have a better idea about how much you'll need for a down payment, if you can carry a second mortgage for an extended period of time, and what type of equity you have available in your first home. You can also see if a bridge loan is optional so you can afford two homes at the same time, or if you need to do a rent-back with the buyer so you can stay in your old home for 30 days to 60 days after the closing while you look for a new home.

Decide whether a contingency contract is ideal

If you are worried that your home will sell instantly the moment you list it and you won't find a new home quickly, you can go with a contingency contract. A contingency contract is where you have found a home you want to purchase but the closing transaction will be "contingent" on the successful sale of your old house. This situation is ideal in certain circumstances where the seller hasn't found anyone to purchase the house and would like to lock you in on the deal. Yet it may not work out as well if you are buying a home in a competitive market.

One of the most important things to remember is to not rush too quickly into buying a property just because your old house has sold already. The last thing you want to do is settle for a less ideal house. You may end up being unhappy with the property as well as the bid you placed to purchase it.