The real estate market is complex on the best of days and even more so if you happen to be buying and selling simultaneously. You might find yourself in this situation for many reasons, and it’s more common than you think. Most people need the money from the sale of their house to buy a new place, so it makes sense that these two transactions would be happening around the same time. While it’s familiar and makes sense in many circumstances, it is complicated and potentially risky as there are many moving parts to buying and selling real estate. So, we’ve rounded up a list of tips to keep in mind if you find yourself in this situation.
It’s always good practice to get a mortgage pre-approval. This helps you gain a clear understanding of what you can afford and gives you a leg up as a buyer. On top of that, getting pre-approved saves you from disappointment if you fall in love with a home that’s outside your price range without knowing it. In addition, talking to a lender will help you understand your circumstances a little better. There’s a good chance that lenders won’t offer you a mortgage until your current home sells if you don’t have the down payment readily available. In that case, you might consider looking into a bridge loan.
Consider a Bridge Loan
Bridge loans come in really handy if you’re buying and selling at the same time. They allow you to carry mortgages for two properties at the same time to bridge the gap between buying and selling. They protect you in case you need to buy before your current home sells. This is especially important in hot markets requiring quick movement if you want to score your dream home. Not everyone qualifies for a bridge loan, and not all lenders offer them, so be sure to look into your options and shop around when it comes to lenders.
Prepare a Backup Plan
The real estate game is unpredictable, and things can change quickly, so you’ll want to think about every possible outcome and set yourself up for success. If your home sells before you buy your next place, you might find yourself out of a house for a few weeks or months. Or, you might sell your home before the new place is move-in ready if you had some enhancements you wanted to do before moving. The two sales will rarely close in perfect timing, and you need to account for some time on either end of the sales. So, make sure you have a place to stay if you’re in a pinch and a plan for if you need to get a move on with little to no notice.
Analyze the Prices on Both Ends
You’ll want to consider both sides of your situation with every move you make. As you’re setting the price for your current home, this is when you will need to be considering what type of cash flow you will need to purchase the type of home you're looking for. Consider both the buyer’s and seller’s market in your area when deciding if this is the right time to take the plunge, and make sure you’re always looking at your situations from both ends.
Declutter & Clean As Much As Possible
As we mentioned, these things can move fast. So, you should always be prepared to move in a pinch. But beyond that, you will want your home to look nice and staged for potential buyers. An excellent place to start the whole process is with a big downsize to declutter everything. That way, everything will be accounted for, organized, and ready to move while looking presentable in the meantime.