Are you trading in your old house for a bigger, better or more modern version? Unfortunately, home sales don’t work like auto sales — and when you’re putting your current home on the market at the same time as seeking out a new house, you’ll have to deal with the buying and selling processes separately but simultaneously.
Between research, renovations, deadlines and a plethora of paperwork, selling a home can be challenging enough on its own, but when you’re looking for a new one as well, it might become downright overwhelming. Because it’s unlikely your old house will sell on the same day as you close the sale on your new home, however, juggling both commitments is essential.
Whether you buy your new home or sell your old one first, there will be advantages to your situation — like having plenty of time to move into your new home when you buy first or having a more specific budget to work with when you sell first. Either way, you should enter both processes with a plan for which you’ll try to get done first and how you’ll handle the details in the gap between. Here are three preparation strategies to help you sell and buy a new home seamlessly.
1. Do Some Market Research
Before making any permanent decisions on whether to sell or buy first, it’s essential for you to research the general and local real estate market to see what party the market favors more at the moment. Whether the housing market favors buyers or sellers will help you determine your own role in each process — and optimize the role that is stronger. A buyer’s market means houses on the market are plentiful, and buyers can expect to make purchases for lower prices, whereas a seller’s market means good homes are more scarce at the moment and sellers can keep their prices high.
Because you can count on one side of the market depending on its current state, you’ll always want to perform the other process first. In a buyer’s market, you should sell your house first because you’ll face some selling competition, and you can be certain you’ll find a home to buy at a reasonable price, even if you wait. In a seller’s market, however, you should buy first because your home will sell relatively quickly.
2. Coordinate Your Closing Dates
Whether you’re buying or selling first, you’ll ideally want your old home’s closing to come after closing your new home — but you can work to make the dates line up by preparing for one process while working on the other. For example, if you’re buying first, prepare your old home for sale while you solidify the details. If you’re selling first, do your research and prepare to buy a new house while your current home’s sale goes through. If you want to be certain your sales lines up timewise, you can even add a contract contingency to make one sale contingent upon the other, depending on the state of the market.
3. Think About a Bridge Loan
If you can’t add a contract contingency or you’re having trouble keeping your dates lined up, you can always opt for a bridge loan, which is a temporary loan that uses your old house’s equity to pay for your new home’s down payment until it sells. You can also opt for a home equity loan to help you through the gap period.
Whether you’re buying or selling first and whatever you decide financially, preparing to perform both processes seamlessly means researching the market, knowing your options and planning ahead. Good luck!