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Top 5 Ways to Buy and Sell a Home at the Same Time

Christopher Ozar

Christopher is the Team Leader of the Ozar Group Real Estate Team...

Christopher is the Team Leader of the Ozar Group Real Estate Team...

Jan 24 7 minutes read

So maybe you’ve had another child and your two bedroom is starting to feel smaller and smaller by the day. The trouble is, that home you fell in love with on Zillow probably won’t accept an offer with a sales contingency, and you can’t afford to buy without selling your current home. Even if you’re one of the lucky few who has the cash to finance a second purchase (before selling), are you really comfortable juggling two mortgages?

You’ve found yourself in a catch 22: How can I buy and sell a home at the same time? Well… It’s not easy, but the good news is, we’ve helped hundreds of people navigate through this difficult process, and now we’re ready to help you.

So let’s talk about your options…

Option 1: Sell Before You Buy

Sell your home and rent temporarily:

This is typically your safest bet and gives you the best opportunity to secure your dream home when it hits the market. You will have the cash from the sale of your current home ready to go, which puts you in the driver’s seat so you can pull the trigger when the right property comes along.  

PROS

  • You have the cash on hand to purchase the next property
  • You know what your exact budget will be based on the sale of your current home
  • You have no time constraints, so you can wait for the perfect property to hit the market, i.e. you don’t have to settle for less than your dream home
  • Without a sales contingency, your offers will be more competitive

CONS

  • You have to find temporary housing (rent an apartment or live with family/friends until you find a new home)


Option 2: Sell Before You Buy

Close on your current home and your new home simultaneously:

In this situation, you would put your home on the market and as soon as you secure a buyer (who is willing to wait for you to find a new home), then you aggressively start your home search. The key here is to try to line up the closing dates of both properties to fall around the same time. This will allow for a smooth transition and help avoid dealing with temporary housing.

PROS

  • You don’t have to find temporary housing and you only have to move once

CONS

  • You need to find a buyer who is willing to give you time to find a new home and hope they don’t find another home they like more in the meantime
  • Due to time constraints, you may be forced to purchase or rent a home that isn’t “perfect” or you risk losing the buyer
  • If your closing is delayed, you may have to find temporary housing
  • If you are under contract on a new home and the buyer of your current home falls through, you will likely no longer be able to purchase the new property and the deal with fall apart. (You will also take  a loss on the money spent on your inspection, appraisal, attorney fees, etc.)


Option 3: Buying Before You Sell

Purchase a new home and then sell your existing home:

If you have enough money to finance a new purchase without selling your current home this could be a good option for you. Once the sale of your new home is finalized, you can make a seamless transition into the new home. Then once you are settled, you can put the other property up for sale (Check with your lender to see if you meet the debt to income ratio requirements).

PROS

  • You have no time constraints, so you can wait for the perfect property to hit the market, i.e. you don’t have to settle for less than your dream home
  • You don’t have to find temporary housing

CONS

  • You won’t know how much your current home will sell for until you put it on the market
  • The longer it takes to find a buyer, the more money you will have to spend on holding costs (mortgage, interest, taxes, HOA fees, etc.)
  • You may have to be more aggressive with pricing to quickly find a buyer if your holding costs become unmanageable
  • If the market corrects, you may have to sell at a loss or rent out your old home until the market recovers


Option 4: Buying Before You Sell

Purchase a New Home with a Sale Contingency:

This typically only makes sense in a buyer’s market, why? Most home sellers will not accept an offer on their property that is contingent upon the buyer selling their home first. Put yourself in the seller’s shoes for a moment, let’s say you have three offers on your home. Two offers are ready to close in 45 - 60 days and they have the cash to finance the purchase. The third offer is contingent upon the sale of the buyer’s current home and they haven’t even put it on the market yet. Which buyer are you more inclined to work with? (It’s obviously the ready, willing, and ABLE buyers!)

PROS

  • You don’t have to find temporary housing

CONS

  • This generally only works in a buyer’s market


Option 5: Buying Before You Sell 

Bridge Financing / Home Equity Loan:

Bridge loans were once commonplace for people buying and selling a home at the same time. You basically get a short term loan that uses the equity from your current home to help pay for the new one. The loan covers the down payment on the new property and then you pay it off when you sell your current home, pretty simple right? These actually disappeared for a while after 2008. Anyone who got caught in a bridge loan during the market crash lost the equity from their first home, and to top it all off, their new home dropped in value. These buyers, for the most part, went underwater and ended up being foreclosed-upon. If you go this route, your biggest risk is a market correction, or your current home sells for less than its appraised value i.e. you are on the hook for the difference between the appraised value and the actual sales price.

So which option is best for you…

Well, that’s not an easy question to answer. Everyone has different goals, life situations, and tolerance for risk.  You need an experienced and trustworthy real estate consultant to guide you through the process so you make the right decision. If you have any questions or are interested a free consultation to dive deeper, we are here to help.


Christopher Ozar

📞 732-720-4676

📧 [email protected]

 

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