💼 How to Sell Your Home While Buying Another

Hello Hampton Roads,

 

Selling your current home while buying a new one can feel like juggling flaming swords. It’s a complicated act that requires perfect timing, careful planning, and a fair amount of patience. But here's the good news: you're not alone. I’ve helped many clients like you navigate this tricky process, and with the right strategy, you can make it all happen smoothly.

This blog will walk you through the most important steps, from deciding whether to sell or buy first to getting your finances in order. You’ll also learn how to avoid common pitfalls and tips to keep stress levels low.     

Step 1: Assess Your Financial Situation

Before you jump into the process of selling and buying simultaneously, it’s crucial to get a clear picture of your financial standing. Understanding your budget, loan options, and how much equity you have in your current home will determine your ability to buy a new one.

• Understand Your Home Equity: The equity in your current home is likely one of your biggest assets, and it will play a key role in how you finance your new home. You’ll need to determine how much your home is worth in today’s market and subtract any outstanding mortgage balance to calculate your equity. This equity will often serve as the down payment for your new home, so it’s important to have an accurate figure. A CMA (Comparable Market Analysis) can show you neighborhood sales activity as well as comparable home sales.

• Get Clear on Your Budget:  Factor in all your current expenses, including your mortgage payment, and determine what you’re comfortable spending on a new home. Do you have funds in place to make double payments for a short time  if needed? Do have a place to stay for when your current home sells and you are waiting to close on your new one? Plan for the best but be prepared and flexible if you need to make alternate plans.

• Get Pre-Approved for a New Loan: Talk with a lender about your plans of selling your current home and buying a new one and get pre-approved for a mortgage based on your plans.  This step is critical because it gives you a clear understanding of how much you can afford for your next purchase based on the proceeds from your sale and you can ensure it aligns with your budget.  

Step 2: Decide Whether to Buy or Sell First

One of the biggest questions you’ll face is whether to sell your current home before buying your next one or vice versa. Both options have their pros and cons, and what’s best for you depends on your situation and the current real estate market.

• Selling First
  In many cases, selling your home first is the safer bet. This way, you’ll know exactly how much money you have to work with for your new purchase. You won’t have to worry about carrying two mortgages or rushing to sell your home before you close on your new one.

  Pros:

  • You’ll know your exact budget for the new home.
  • You can avoid paying for two mortgages at once.
  • It simplifies the buying process since you won’t be under pressure to sell your home quickly.

  Cons:

  • You may need temporary housing between selling your old home and moving into your new one.
  • You could feel rushed to buy the next home, leading to a less thoughtful decision.

• Buying First
  If you find your dream home before selling your current one, you may choose to buy first. This strategy works best if you’re in a strong financial position and can comfortably handle two mortgages temporarily.

  Pros:

  • You won’t feel pressured to find your next home quickly.
  • You’ll have a place to move into as soon as you sell your old home.

  Cons:

  • You may have to carry two mortgages for a time.
  • You may feel rushed to sell your home, which could result in a lower sale price.

  Bridge Loan Option:
  If you choose to buy first but need the equity from your current home for the down payment, a bridge loan could be the solution. This short-term loan allows you to borrow against the equity in your existing home to use as a down payment on your new home. Once you sell your old home, you can pay off the bridge loan. However, keep in mind that bridge loans come with higher interest rates, so they should only be used if you’re confident you can sell your home quickly.

Step 3: Prepare Your Home for Sale

Whether you choose to buy or sell first, preparing your current home for sale is an essential step. The goal is to attract the right buyer quickly and at the best possible price. Here’s how to get your home market-ready:

• Declutter and Depersonalize
  Make your home a blank slate for potential buyers. Remove personal items like family photos and kids’ artwork, and declutter countertops, closets, and other storage spaces. A clean, organized home feels more spacious and inviting.

• Stage Your Home
  Staging can make a big difference in how quickly your home sells and for how much. You don’t need to spend a fortune—simple things like rearranging furniture, adding fresh flowers, or setting the dining room table can create a more appealing atmosphere. Also if you have the ability to put things in storage that would help--having less furniture can make the home feel bigger and show better! 

• Make Necessary Repairs
  Take care of any minor repairs before listing your home. Buyers will notice things like chipped paint, leaky faucets, or broken fixtures, and these small issues can make them wonder if there are bigger problems lurking.

• Hire a Real Estate Agent
  An experienced real estate agent will help you price your home correctly, market it effectively, and negotiate the best offer. They can also guide you on whether you should list your home before or after finding your next one based on the local market conditions.

Step 4: Time the Sale and Purchase

Once you’ve decided whether to sell or buy first and prepared your home for sale, it’s time to figure out how to time both transactions. Here’s where things can get tricky.

• Negotiating a Rent-Back Agreement
  One option for timing your transactions is to negotiate a rent-back agreement with the buyer of your home. This allows you to stay in your current home after the sale closes while you finalize the purchase of your new home. Essentially, you’ll rent the home from the buyer for a set period, giving you some breathing room to complete your new home purchase.

• Making an Offer Contingent on Selling Your Home
  If you’re buying first and want to avoid owning two homes at once, you could make your offer contingent on selling your current home. This means the sale of your new home will only proceed if you successfully sell your old one. Keep in mind, however, that in a competitive market, sellers may be less willing to accept this type of offer.

• Aligning Closing Dates
  Another strategy is to align the closing dates of both transactions as closely as possible. Negotiate for a longer closing date on the sale of your home. This way, you can sell your home and close on your new one within a short time frame. Remember unless you are using a bridge loan or some kind of short term financing, you will need the funds to clear from the sale of your current home in order to be used for the purchase of your new one. This option requires careful coordination between your real estate agent, lenders, and title companies but can save you the hassle of temporary housing.

Step 5: Keep Calm and Carry On

It’s easy to get overwhelmed when you’re trying to sell and buy a home at the same time. But with careful planning, patience, and a clear focus on your goals, you can successfully navigate this process.

Remember, this isn’t a race. Take your time to make thoughtful decisions and lean on your real estate professional, your lender and your settlement agent for help. 

If you’re ready to make a move and want personalized guidance tailored to your situation, schedule a free consultation with me today! I’d love to help you navigate this exciting journey:
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Thanks for Reading,

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