How to Buy and Sell a Home at the Same Time
Let’s set the context: you have already gone through the homebuying process once, and you probably learned a lot from that experience as a buyer. Now, you’re ready to buy a second home. But here is the kicker: you have to sell the home you’re currently living in to afford the home you want to buy. You may be wondering, can I do that at the same time?
The answer is yes and it’s pretty straightforward (in theory) with complexity in the process (in practice). To start, you need to make sure everyone is on the same page. This includes the buyer of your home and the seller of the home you want to buy, depending on who you get first. You may even need to work with multiple lawyers, real estate agents, mortgage brokers/banks, etc.
When you’re ready to buy a new home, you should contact an agent to list your house on the market. Once your house is on the market, you can start shopping for your new home. Here’s where keeping everyone on the same page is important.
Scenario 1: You have a buyer for your house, but you haven’t found a home you want to purchase just yet.
Option 1: Proceed with the sale of your home and find temporary housing. This is less than ideal since you’d have to move twice! You might be able to secure a post-occupancy agreement that would allow you to stay in the home for a limited period of time even after the sale and avoid a double move.
Option 2: State in a counteroffer that there is a contingency to you getting an offer accepted on a home (purchasing your second home) before closing and selling your current home. This is more likely to succeed in a seller’s market.
Scenario 2: You want to put in an offer on a home, but you haven’t found someone to buy your house yet.
Option 1: If you have the means and can find a way to come up with the money for the downpayment and closing costs, you can purchase your new home before you’re able to sell your current home. If you don’t have the cash yourself, you may be able to find a financing solution via a bridge loan — a short-term loan based on the equity in your current home. Either way, this is less than ideal if you’re not sure how long it’ll take to sell your home since you can end up having to pay two mortgages at the same time!
Option 2: In your offer, include a contingency that would allow you to sell your current home before purchasing and closing on the new home. This is more likely to succeed in a buyer’s market.
You can do all of this by knowing ahead of time how you want to proceed and speaking with a real estate agent and — depending on your state — your lawyer. Be sure to let them know that you want to include a contingency of you selling your home in order to purchase the new home if that’s the route you’d like to go. Your lawyer will communicate this to the buyer and/or seller’s lawyer in your offer and if they agree then voilà, you are starting off with the right foundation.
Assuming you can get your timing right, the closing day will be a flurry of activity. You may even be closing on the house you’re selling, handing the keys over to the new owner, closing on your new home, and receiving your new keys.
See! Pretty straightforward. Of course, with multiple and simultaneous transactions, there will naturally be a bit of complexity. You will need to lean heavily on your real estate team to make sure everything goes smoothly.
