As a homeowner, you may find yourself in a situation where you need to move into a bigger house or downsize to an apartment. This often happens when we have children and want more space, or if we’ve been living alone for some time and enjoy the luxury of less space. But what do you do with your current home? Sell it at the same time as buying your new one? Or wait until after the purchase is complete before selling it? There are pros and cons to each approach which we’ll discuss below. Let’s get started!
Option 1: Sell your current home before buying your new one
This is probably the most common option when buying and selling a house simultaneously. It means you don’t have to wait for a sale to go through. Instead, you can purchase a new home while simultaneously listing your old one.
However, there are drawbacks to this method as well. For one thing, because it involves two separate transactions—a home sale and a home purchase—there are twice as many fees involved. This includes commissions from real estate agents and transfer taxes. In fact, it could be more costly than waiting until the end of the process.
Furthermore, the process could take longer to complete. Depending on how much your homes are worth, staging can be costly and time-consuming. During this process, you’ll have to find somewhere else to live, which will probably turn out to be another rental or Airbnb property until everything is done. And if you find yourself in a bidding war over your dream home, your current one may end up sitting on the market for months before selling.
That being said, there are some benefits to listing your old home while buying a new one at the same time. For example, when selling a home that doesn’t require too many changes or renovations, there won’t be any interruption in mortgage payments while waiting for the sale to go through. Plus, you have the advantage of having a new home purchase to fall back on if your current home doesn’t sell right away.
Option 2: Sell your current home after buying your new one
This approach is a little less common but can be a good option if you find yourself in a bidding war over your dream home. It involves buying your new house before selling your old one, giving you some time to move in and settle. Then, once your old home is sold, you can use that money to pay off your mortgage for your new place.
There are a few drawbacks to this method, though. For one thing, it can be risky if the market takes a downturn in the months it takes to find a new home and sell off your old one. That means you’ll need to find another property with an affordable down payment or continue renting until your current one sells.
Another drawback is that there’s no guarantee of selling your home in time for you to use the equity to pay off the purchase of your new place. Depending on how much both properties are worth, you could find yourself needing another mortgage loan after buying your new house—which would mean more fees and trouble when moving into a completely different neighborhood.
One last thing, why not find out if you’re ready before committing? It can be like piling on more debt when you already have two looming mortgages. Not everyone has the stomach for it.
Successfully Trading Houses in a Simultaneous Transaction
Know the value of both properties
The first tip for this dilemma is to make sure you know the value of both properties. Before signing any papers, you should have a good idea about how much your current home is worth and what your new house will cost.
As always, price negotiations are important when buying a house. If the seller knows that you’re potentially in a position where you need to sell quickly, they may be more willing to negotiate prices on both properties. Otherwise, they’ll know they have the leverage to hold out for a better deal.
Find the right mortgage lender
Finding the best mortgage lender is especially important if you’re trying to purchase and sell a house simultaneously. You’ll need a lender who can work with you through both transactions and won’t penalize you for having two mortgages at once.
Get your timing right
Think about your timing. If you’re selling first, find a real estate agent who can help market your home to potential buyers. If you’re buying first, start looking for houses in the area where you want to live. Make sure to have your finances in order so that you’re ready to buy as soon as your current home sells.
Which Option Is Right for You?
There are pros and cons to both buying and selling a house at the same time, so it’s essential to weigh your options carefully before making a decision. If you have any questions about the process, be sure to consult with a real estate agent. They can help guide you through the process and give you more information on what to expect. And, of course, if you’re feeling overwhelmed, don’t be afraid to ask for help. Buying and selling a house simultaneously can be stressful, but it can be done successfully with proper planning.