A few things to consider…
The two things that will have the biggest affect on the process as a whole are, 1. Your personal finances, having a large amount of savings will give you more options, and 2. The type of market, buyer or seller. The type of market will determine what kind of conditions you can ask for.
In a sellers market your will get better offers for the current home. There are certain conditions you can ask for when buying that will make the process easier but might not be accepted in a seller’s market.
In a buyers market those conditions are more likely to be accepted but offers for your current home could be lower.
So what are your choices? You can buy before selling, you can buy after selling, or you can try and do both at the same time with a simultaneous closing.
Buying Before Selling
This is a great option if you can make it work financially. Buying before means you can take your time searching for a home and there won’t be any problems if the closing gets extended. There are a few options if you want to go this route.
- Make a Contingent Offer– This means you can make an offer on a home and the seller will get paid when you sell your current home. This is where knowing who the market is in favor of is critical, and having a good agent who understands this. In a sellers’ market with many buyers competing for only a few homes making an offer contingent is not as attractive as an all cash or higher priced offer. However, if there was little interest in the property or it was on the market for awhile it is likely that a contingent offer will get accepted.
- Request an extended closing- You can request that the closing on your new home be extended past the 30-45 day standard closing. This will give you enough time to sell your current home. Be cautious though. If your current home doesn’t sell within the extended closing period the new home could be forfeit.
- Purchase with a Bridge Loan- This is a short term loan that can be use to pay for the down payment of a new home. These loans are meant to be short term and to be payed back right away with the sale of the current home.
- Use Savings- If possible this is the best way to go. There’s no loan or time constraint but if this is not an option consider a bridge loan or a HELOC
- HELOC- This stands for Home Equity Line of Credit and allows you to borrow against the equity of your current home and is repaid upon the sale of the home. Be aware that certain government sponsored mortgages like FHA do not allow you to use a HELOC to buy a new home.
If you are trying to sell and buy then you already know home complicated and time consuming it can be to buy a house. Add on top of that the process of selling a home too and all the moving pieces involved can make your head spin. This is where your agent comes in. It’s difficult but not impossible to close simultaneously and having an experienced agent who’s expertise you can rely on will be important.
selling and then buying
- Sell and Rent– Selling your home and then renting temporarily while you look for a new home is a safe options and gives you plenty of time to buy, sell, and adapt to any changes in the timeline. However the downside is having to move twice.
- Sign a Rent Back– Sell your home first and rent from the new owners