Tips for buying and selling a home at the same time
Should you get an offer on your home before you try to find a home to buy? Or should you find the home you want before putting yours on the market? Will a bank even allow you to buy without selling anymore?
Before the real estate banking crisis of 2008, it was very easy to leverage the equity you had in your current home. By opening a home equity line of credit (HELOC), you could borrow up to 95 or even 100 percent of your home’s value and use that money as your down payment for the purchase of your next home.
Nowadays, the equity in your home has likely slipped away and lenders rarely allow such leveraging. It’s a new market and we have to find a new way to do things. It was stressful before and it can be even more stressful now. It’s difficult to precisely time a real estate transaction, and yet, the financial stakes are high.
So let me reassure you up front: In my years as a Realtor, I’ve represented many clients who were involved in buying and selling at the same time. And you know what? One way or another, it’s always worked out.
Of course, there are things you and your Realtor can do to increase the odds that your multitasking will pay off. Here are 5 tips to get you started.
1. Know your finances inside and out. This is a no brainer. You need to know not only what you can afford to buy, but what your house is worth before you even get started. Talk to your Realtor and consult a mortgage banker or broker for loan pre-approval.
2. Start packing. Start boxing up stuff you don’t need easy access to. Get rid of all the things you won’t need until you’ve moved into your new home. This will help make your home show better. And starting the packing process now will make it that much easier to move later. You may need to rent a storage unit temporarily for your stuff.
3. Do whatever you need to do to sell your home. Do you have a toilet that constantly runs? Is your kitchen lodged in the 1950s? If so, get busy fixing those things that could cause your home to sit on the market longer than necessary or affect your home’s value.
4. Start shopping and figure out the market. Start going to open houses and seeing what’s out there. Begin the process of elimination: What are the must-haves and the deal killers?
5. When you’re ready, list it. Depending upon your situation, you might want to list your property toward the higher end of its value range, once you’re actively in the market. This can buy you time while you shop for your next home. And who knows? You might get more money. (It still happens.)
Starting now helps reduce the stress later
From this point on, the situation can play out in any number of ways.
For example, you might find a home you love before you’ve got a firm offer on your house. In that situation, you could make the seller an offer with a contingency that your offer is subject to the sale of your home.
On the other hand, let’s say you’re the seller and someone has made a solid offer on your home. Great. But you haven’t found your next home yet. Here, you might ask the buyer to let you stay in your home for a month or more, as a renter, while you continue your house search.
I could go on listing all the variables and the possibilities. The main thing is to do as much of the buying/selling work as you can up front. This will help you react more quickly later. And best of all, you’ll be less stressed.
By the way: Zillow.com has a helpful article with more tips about buying and selling a home at the same time.