Most first-time home sellers never think about how tricky this process can be… Until they do it.
Buying a new home while you’re still living in your current home can create a long string of dominoes. And if just one of these dominoes fails to tip over in the line, the whole thing falls apart.
So, in this blog post, I’m going to walk you through the entire process to ensure that all the pieces come together easily for you!
Here are the three ways you can buy and sell a home simultaneously.
Option #1: Closing Conditionally
Most homes are sold conditionally. In this case, you would put an offer in on a new home – but you would only be obligated to buy it if someone buys your current home. In essence, if your buyer falls through, then you reserve the right to back out of the new home’s contract as well.
The apparent drawback to selling a home conditionally is that it transfers all the risk to the home seller, and most home sellers want to avoid assuming that trouble on behalf of their buyers. This is especially true if you’re trying to sell a home in a competitive market.
Option #2: Own Both Homes Temporarily
This is a viable option if you can afford to carry two mortgages. In this case, you would get a mortgage on the new home and wait to move out of your current home until you’re ready.
This process is helpful when your new home needs significant renovations, but you want to move in once the renovations are complete. It’s also beneficial when you’re turning your old house into an investment property and planning to rent it out after you move into your new home.
But there are several drawbacks. First, you’d need to be approved for a second mortgage, which is entirely up to the bank’s discretion. Second, you’d have to pay both mortgages simultaneously. Third, you can’t apply the funds from the sale of the first home towards the purchase of the second – which means you’d need to come up with the down payment out of pocket.
Option #3: Rent A Home
Most home sellers are unaware that they can stay in their current home after it sells by renting it back from their buyers. Yep, it’s called a rent-back deal. In this case, you would get all of the proceeds from the sale without having to move – which gives you both the time and money to purchase a new home.
Of course, the big drawback is that it transfers the risk to the buyer, and most buyers are hesitant to take the risk of renting their new home and prolonging their move-in date.
The Bottom Line
Again, buying a home when you have a home to sell can be a tricky business.
Orchestrating a transaction like that is an art form, and you need a great real estate agent who can guide you through that process.
If you’re thinking about making a move (or know someone who is), I can help! Just give me an email or send me a text. No pressure, no sales tactics, just helpful advice and the guidance you need!
And finally, if you’re still thinking about making a move, feel free to save this blog post for future reference so you can come back to it!
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Most first-time home sellers never think about how tricky this process can be… Until they do it. Buying a new home while you’re still living in your current home can create a long string of dominoes. And if just one of these dominoes fails to tip over in the line, the whole thing falls apart. […]