In this high paced real estate market many homeowners who are trying to sell their home are also buying a home during the same time. The most important thing to do in this sort of situation is put your home up for sale far in advance of buying a new one. You may want to consider selling first especially in a buyers market. This way you will know exactly how much money you will have when buying a new home. Too many potential sellers start looking at homes before they put theirs on the market and often fall in love with something and then have to rush to get their home on the market. They price it low in order for a quick sale to find a buyer right away to avoid losing the home they like to another buyer who has nothing to sell and is ready to move forward.
The ideal situation would be to sell your home and have a place to stay while you are looking for another home. This will give you more time to find something you really like instead of buying something right away because you found a buyer for your home and needs to close in 45-60 days. Sometimes you can get lucky and will find another seller who is willing to wait for your current home to close and then you can do a simultaneous closing on your sale and purchase the same day.
Most people who are selling a home and buying another one need the proceeds from the sale in order to buy the new home. Finding a seller who will be willing to go to contract with you and wait for your home to close is VERY rare. This situation is called a sale contingency and not something you should expect to find, especially in a buyers market where it takes a while to sell a home.
For people who do not have the luxury of selling and living somewhere else for a while possibly with family or a rental then getting the home on the market right away is still the 1st priority. As soon as the house goes on the market then you can start browsing the market for something to buy. You may or may not find something right away and if you do then you will just have to hope you find a buyer real soon on your home.
Even though most sellers will not accept a sale contingency, I often see sellers willing to work with a buyer who may have not sold their current home but is in contract with a buyer. This scenario is a little more common and makes things a lot easier. Keep in mind though even if you have a buyer for your house and you are in contract, you may run into situations where a seller will not go to contract with you until your buyer gets their mortgage commitment and it can take 30-45 days after you sign a contract with your buyer for them to get the commitment. This can be stressful because during those 30-45 days there is a chance that you may lose the house you like to another buyer.
The reason why a seller of a house you want to buy will not go to contract with you until your buyer receives the mortgage commitment is because not every buyer gets approved for a loan. There is the ever so popular and easy to acquire “pre-approval” but what is important is the mortgage approval. The frustrating part of this process is that the buyer will not find that out for 30+ days after they sign a contract if they are approved for the loan. Many things can happen that would force a bank to deny the buyer a loan. An appraisal on the home can come in way too low, the buyer(s) lose their job, the buyers do not have enough cash in the bank to make it to the closing to cover the rest of the down payment and the closing costs. There are other reasons why a buyer could get turned down for a loan and these are just a few examples. So just because you are in contract with a buyer does not mean that the sale is really going to go through.
There is one way to assure yourself that a seller will go to contract with you even if you have not sold your home and that is to waive the sale contingency. You are essentially saying that you do not need to sell your home to be able to afford the next one. You will have to get approved from your bank proving to the seller that you can get a loan without selling your current home. This tells the seller that if for some reason your buyer does not get approved for the loan and your sale falls through, you will still be buying their home otherwise you will lose your down payment. Though a lot of this seems difficult and stressful, I do double closings all the time. Close on the sale of your home in the morning and close on the purchase of the other one later that day or sometimes 1st thing the next day.
So what happens if you put your house on the market, found a buyer but have not found a new home yet? You do not have another place to stay once you sell your home. You can try to negotiate a long close or convenient rent-back option, where you can stay in the house as a rental tenant until you take possession of your new home. Typical closings take 45-60 days and in this situation you could see if the buyer would wait 90-120 days for your to close. In the event that you are lucky to find a buyer this flexible just realize that you will need to be out of the house by the 120 days regardless if you found another home or not.
Selling a house can be stressful, selling and buying at the same time can be an extremely stressful situation and coordinating the move seems to be the nerve-racking part of it all. Millions of people do it every year but just make sure to give yourself time to prepare for the whole thing. Get your home on the market early and if possible try to have another place to stay if you can’t coordinate the sale and purchase around the same time.
Leave A Comment