Is buying and selling a home at the same time even possible? It does sound complicated, and to be honest, the process isn't easy, but it is feasible. You need to enlist professional help, work out your budget, and get ready for loads of action to see it done. Before you board this real estate rollercoaster, take the time to gather all relevant information on the whole process and organize it well in advance. Preparation is nearly half the work.

Understand the process and see how you fit in

There are two major considerations you should take into account at the very beginning:

  1. the types of markets you are selling and buying a home in, and
  2. whether you should sell or buy a home first.

Although we're talking about buying and selling a home at the same time, one step slightly precedes another. The question is which option suits you best regarding mortgages and financing. Both alternatives have their pros and cons, but more about that later.

Firstly, get familiar with the local market and the one where you plan to purchase your new home. The difference between buyer's and seller's markets is key to timing your home-selling-home-buying process. Ideally, your current home will be in a seller's market, and you'll look for a new home in a buyer's market. What does it mean?

The seller's market is characterized by a shortage of housing and increased demand, allowing sellers a better negotiating position. On the other hand, a buyer's market provides buyers not only with a good choice of homes but also favorable prices. What happens in the opposite case?

Timing is crucial if you need to wait to sell or the offer of potential new homes is scarce, extending your search. In this situation, you should include a sale contingency in your offer and request prolonged closing. Sale contingency allows you to legally cancel the purchase of a new home if you're unable to sell your current one - and keep the deposit.

How to know if you should buy or sell a home first?

Although you're buying and selling at roughly the same time, one process comes before the other. Your circumstances will determine what comes first, and the pros and cons of each will help you decide.

Advantages of buying before selling

        You can move out of your current home right away.

        Skipping the short-term storage rental saves you money.

        You can be picky when looking for a new home if you have a place to live.

Drawbacks of buying before selling

        Unless you have enough cash without tapping into equity, you may not be able to make a competitive offer.

        If your current home doesn't sell quickly, you may end up with two mortgage payments.

        Financial pressure may coerce you to sell and accept an unsatisfying sale proposal.

Benefits of selling before buying

        Mortgage-free, your credit score will rise, allowing you to make a better offer.

        Closing one deal before starting the next alleviates quite some pressure and stress.

        You'll have a clear picture of your equity and be able to put it toward home acquisition.

Disadvantages of selling before buying

        You will have to move out of your current home and pay for temporary lodging.

        You'll also have to pay for storage for your belongings indefinitely, that is, until you find a new home.

        Home prices and interest rates may rise as you search for the right home.

Parts of the process you should familiarize with

Before making a decision, define your starting point as it will significantly impact the process of buying and selling a home at the same time.

        If you don't have experience in real estate, partner with a realtor to minimize the effect of possible challenges along the way.

        Determine the realistic resale value of your home and how much equity you can count on.

        Consider completing a home inspection, its costs, potential repairs, and home staging expenses should you sell in a buyer's market.

In case you decide to buy first

You are advised to create a buffer zone before closing on the new purchase and selling your current home. If postponing the closing is not possible for any reason, a sale contingency in a contract is a life-saver.

Unless you're among the ones who have the full amount needed for home purchase at your disposal, you'll need to extend the closing beyond its regular duration. It should get you enough time to sell a home. And if it's still not enough, a sale contingency allows you to legally withdraw without losing a deposit.

Financing-wise, you have a couple of options at your disposal. You can either purchase with the help of a bridge loan, your savings, or a home equity line of credit (HELOC).

What comes between buying and selling?

Buying and selling a home at the same time puts another consideration on your schedule. It's moving out of your current home to the new one. Timing a residential move right is a challenge, but you can ensure the easiest possible process with the help of experienced movers. After all, they've conducted numerous relocations such as yours; who better to handle it during this hectic time?

Should you choose to sell first

Moving twice is more costly, but doesn't have to be more taxing. It may even relieve some stress during the whole process as you won't feel pressured to purchase just any home after your current home sells.

Keep in mind that you'll also have to find a storage facility nearby your temporary lodging so you can have access to your most necessary belongings. Choose a short-term storage option if you expect less than three months to find a new home.

A quick recap

Whether you'll list your home for sale or purchase a new one first depends on several important factors. You will understand them best if you partner with a real estate expert with excellent knowledge of both markets; your local one and the one where you plan to buy a home. Don't hesitate to team up with professionals in every stage of the home selling, moving, and buying process.

The whole (or)deal can be overwhelming even if you know what's ahead of you. The more so if you don't. Therefore, do your best to get familiar with as many aspects as possible and choose the strategy that will ensure the smoothest process of buying and selling a home at the same time.

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