When you are trying to move to a new home, you have to balance both the process of selling your current home and buying a new home all at once. This can feel impossible at first, but it’s actually a very common way that the process goes. When you were a first-time buyer, everything was so simple and streamlined, but as a seller that’s buying, there is another layer to this equation.
The good news is that if you can plan your schedule carefully, understand the current market, and an understanding of your financials, it will make this process doable. Take a look at how you should navigate the process.
Learn about the state of the market
First, you should really get to know the current market. Is the current market leaning towards a buyer’s market or a seller’s market? This will affect how you should time out the process and the pricing of both purchases and sales. You might be selling in one market and buying in another, which means that you’ll need to factor that into your timing as well.
A buyer’s market is one in which there is a large inventory of available homes and a lack of buyers. This means that you’ll find plenty of homes to choose from and you’ll have the bargaining power to get a good price or other perks in your offer that a seller may be more likely to agree to. For example, you may be able to put a contingency in the offer that you agree to purchase their home once yours sells first since the buyer doesn’t have many other offers coming in right now.
In a seller’s market, you’ll find that there are too many buyers and not enough sellers to balance out the demand. This means that sellers have the upper hand where they won’t have to accept any lowball offers or too many contingencies. Since you are selling your home too, this means that you could ask your buyers to do a rent-back after closing which gives you time to find your new home.
Choosing your timing and check your financials
The above mentions what to do in a buyer’s market and a seller’s market to benefit your situation. In some cases, people will simply sell their house before buying, which is possible if you work out the right arrangement.
You can go about this by making an offer with a settlement contingency in which you list your home, receive an offer, and then starting looking for a new home before closing so that you can submit a settlement contingency when you’ve found your new home that says you’ll buy the home contingent on the sale of your current home.
You could also decide to find a temporary rental to live in or sign a rent-back which means after the sale of the home, the new owners would allow you to rent the home by continuing to live in it for 2-3 months. This plan works well if you would rather know how much equity you can put towards a new home but you may end up paying for a temporary rental or storage unit.
If you buy a house before selling, you can request an extended closing which gives you more time to sell the house and use your equity to buy the new house. You can also put a contingency on the offer which says you’ll only buy if you sell your existing home, but this doesn’t work if there are many offers. You can always use your own savings to pay for the down payment and then sell your home later or get extra help through a home equity line of credit or a bridge loan.
It’s important to understand where you stand financially in making your decisions because your agent can help you determine the smartest route based on the current state of the market. Look into your home’s resale value and how much equity you have in the home.
You can get a pre-inspection to understand how much work and money will need to go into repairs, while also looking into how much equity you have in the home. Can you afford to purchase without using the equity since it won’t be accessible until after close? Figure out what you have in cash and loans you could qualify for so that you can make an educated decision. Don’t worry about selling and buying all at once. This common occurrence is manageable with a great agent and knowledge of the current market and your financial situation going into the process.