There’s no doubt about it: buying a home is a stressful process. So is selling a home. And if you’re doing the two simultaneously, like many people are, then you’re in for a lot of work! But don’t worry: the key to successful home buying and selling, whether one at a time or in conjunction, is proper planning.
Read on to learn more about the process of buying and selling a home at the same time!
Research the housing market you’re entering
When you’re considering selling your current place and buying a new space at the same time, it’s vital that you understand the market. Is it a buyer’s market or a seller’s market?
- According to Zillow, a buyer’s market describes the situation in which there are more homes for sale than there are buyers for those homes. That means that sellers are going to have to be more flexible in order to sell their home and buyers have the bargaining power.
- In a buyer’s market, you might have to leave your home listed for sale for a bit longer than you would in a seller’s market, in order to receive a fair asking price
- In a seller’s market, on the other hand, there are more buyers looking for new homes than there are homes to buy. That means that the sellers have the advantage: inventory is low, which means buyers can’t be too picky.
- A seller’s market might mean a slightly higher sale price, or even a bidding war, and a faster timeline for the sale to close.
When you’re buying and selling a home at the same time, regardless of what the market is (buyer’s or seller’s) you’ll have at least a part of the equation to your advantage: the key is to figure out which type of market you’re in, so that you can plan accordingly.
The main takeaway is your timeline:
- Do you expect your current home to sit on the market for a few months before you get an offer (buyer’s market) or
- Do you expect that your home will sell within a few weeks of listing it (seller’s market)?
Once you know this, you can start to build a timeline for buying your next place. Again, take a look at the market. If your new neighborhood is a buyer’s market, you may have more options to choose from and more leniency in terms of closing dates with the sellers of your new home. If it’s a seller’s market, you’ll need to act fast to get the home that you want, and that could mean waiting a few months for more inventory to be for sale.
Now figure out the figures
Once you research the market and establish a timeline, it’s time to take a look at your financials. There are a few things that are at stake when selling and buying, and one of them is the mortgage payments.
If you are able to buy a new home while still living in your old home, remember that you’ll need to cover closing costs and a down payment on the new place. Additionally, you could be juggling two mortgage payments and other expenses, until your old home sells, which could take a few months or even a year.
If you need the equity from your old home in order to put a down payment on your new home, then you’ll need to wait to make an offer on a new house until the sale of your old house closes. In that case, you will probably need to find a temporary place to live (and figure out how to pay for it).
Talking to a financial advisor or a mortgage advisor is always a good idea at this stage of the game! Make sure to ask about mortgage approvals for your new place, too—if your money is all tied up in your current place before it sells, and you can cash your equity check, you may not be approved for as much as you were planning on.
Consider a contingency offer
A contingency offer is an offer in which you agree to enter into a contract to purchase your new home if and when your current home sells. If it’s a buyer’s market, homeowners will be more likely to agree to these terms, but it might be difficult to pull off in a seller’s market.
Understanding bridge loans
A bridge loan is a short-term loan that can help you cover the cost of a down payment on a new home, while you still have not sold your old home. Interest rates are typically very high on these types of loans, but it’s a great way to leverage the equity you have in your old home while you are still on the hook for the mortgage. Once you sell it, pay back the bridge loan with the check from the sale.
The key selling and buying a home is planning, so ask your financial advisor and realtor as many questions as you need to and stay invested in the process. Once you’re ready to move, Highland Van & Storage is here to help. Click here to get a quote or call us today at 604-581-2300 to ask about our storage services!