If you’re a homeowner looking to buy your next home, then you’ll likely have to juggle selling and buying at the same time. In an ideal world, you’d close on both homes on the same day, but that’s rarely the case. Expect some time between selling your house and buying a new one – or vice versa.
In this Redfin article, we’ll outline the steps for buying and selling a house at the same time. Whether you’re looking at homes in Indianapolis, IN, or in Dallas, TX, here’s how to sell and buy a home at the same time – and what you can expect along the way.
Sell or buy first: Which option is best for you?
The first step is deciding whether you’ll buy or sell first. Ultimately, the best approach depends on your financial situation, risk tolerance, and housing market conditions. Here’s what to consider:
| Sell first if: | Buy first if: |
| You need the proceeds from your home sale for your next home’s down payment. | You have enough savings or financing options (like a HELOC or bridge loan) to cover a down payment before selling. |
| You want to avoid the risk of paying two mortgages at once. | You want to avoid the stress of finding temporary housing. |
| You’re in a buyer’s market, where homes take longer to sell. | You’re in a seller’s market, where homes sell quickly, and you may struggle to find a new home. |
Understand your local housing market
You’ll also want to evaluate the local housing market, as it can influence your decision to buy or sell first. If you’re moving to a new city, the housing market may be different, so you’ll need to time your home sale accordingly. Understanding whether you’re in a buyer’s or seller’s market can help you choose where to start.
Is it a buyer’s market?
A buyer’s market means there are more homes for sale than buyers. As the buyer, you’ll likely have more options and negotiating power. However, it could take longer to sell your home than you’re anticipating.
Options to consider:
- Home sale contingency: Allows you to back out of buying if your current home doesn’t sell. It’s useful if you’re relying on proceeds from the sale.
- Extended closing: Gives you more time to sell your home before finalizing the purchase.
Is it a seller’s market?
A seller’s market means there are more buyers than homes for sale. As the seller, you’ll likely have an easier time selling your home. However, you may find it difficult to buy a home in this market.
Options to consider:
- Settlement contingency: Used when you’ve accepted an offer on your home but need the sale to close before purchasing a new one.
- Rent-back agreement: Allows you to temporarily rent your home from the new owner, giving you extra time to find your next home.
If you’re still unsure where to start, consult a real estate agent who understands your local market and can guide you based on current conditions.
Buying a home before selling: Tips to help
Determine your financing options
Before you buy your next home, it’s important to determine how you’re going to finance the purchase. There are a few ways to finance your next home purchase if you can’t use the proceeds from your home sale. Some common financing options include using your savings, a home equity line of credit (HELOC), and a bridge loan.
Use your savings
It’s possible you have enough savings to cover a down payment, which can make it easier to buy a new home before selling. Keep in mind that you’ll also need enough funds for closing costs, additional fees, and moving expenses.
Use a home equity line of credit (HELOC)
For many homeowners, their savings are tied up in their current home as “equity.” A home equity line of credit (HELOC) allows you to access your home equity in order to finance your next home purchase. If you qualify, this can be a good option to consider.
Use a bridge loan
A bridge loan is a short-term loan that allows you to cover the cost of a down payment until the home closes. Some banks offer this loan, but not all, and it can be difficult to qualify.
Consider a home sale contingency
Including a home sale contingency in your offer allows you to back out of the home sale if your current home doesn’t sell. In other words, buying a new home is contingent on the sale of your old home.
Request an extended closing
An extended closing gives you extra time if you’re close to selling your old home. It can give you enough time to coordinate the sale of your home while purchasing a new one.
Rent out your old home
If you’re not close to selling your home, consider renting it out. Depending on the market conditions, this can be a good idea to help offset the costs of owning two homes.
Selling your home before buying: Tips to help
Plan for temporary housing ahead of time
Whether you want to negotiate a rent-back agreement, find a short-term rental, or live with family or friends, it’s best to decide where you’re going to live before listing your home for sale.
Consider a rent-back agreement
A rent-back agreement is a temporary lease where you rent back your old home from the new owners once the sale is completed. This allows you more time to buy your next home or complete the sale if you’re already in the process of buying.
Request an extended closing date
You can also ask for an extended closing date when selling your home. This gives you additional time to find your next home and ensure there’s little to no overlap when the sales close and you need to move. Keep in mind that this works best if you’re close to making an offer or starting the closing process on your next property.
Understand your budget for buying
If you’re planning to use the proceeds from your home sale to finance your next home, it’s important to come up with a budget in advance. You may have a number you’d like to sell your home for, but that may not be the reality. Determine a range for your budget in advance and price your home accordingly.
Is it better to buy or sell your home first?
It’s up to you and your circumstances whether you sell your current home or buy a new one first. There are pros and cons to both, but understanding your finances, determining a timeline, and working with a skilled real estate agent can help make the process that much easier.
FAQs about buying and selling at the same time
Can I use the same real estate agent for selling and buying?
Using the same agent can simplify coordination and negotiations, but if you’re moving to a different city, a local expert in your new area may be more beneficial.
How do I make an offer on a new home without the proceeds from selling my current one?
You can include a home sale contingency, negotiate a longer closing period, or use a HELOC or bridge loan to finance the purchase temporarily.
What happens if I sell my home but can’t find a new one in time?
If you sell first but don’t have a new home lined up, you can consider a rent-back agreement, short-term rental, or staying with family or friends while you continue your home search.
How do I time selling and buying to avoid paying two mortgages?
To minimize overlap, you can negotiate a home sale contingency, request an extended closing, or use a bridge loan.
The post How to Sell and Buy a House at the Same Time: The Ultimate Guide appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.
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