If you’re a homeowner who wants to buy a house while you own your current home… you’re not alone.
The answer to that question depends on several factors.
Your Personality
Just the thought of having two mortgage payments – even for a short period of time – can cause massive anxiety in some folks. Despite assurances from your lender of a simultaneous close on two homes, the uncertainty may linger.
Then there’s the pressure to accept an unattractive offer on your current home just to ensure the home sells. On the other hand, if you wait to purchase, you’ll have the luxury of being able to negotiate offers as they come in.
If you crave certainty, you should wait until the current home sells. Then buy a house after the close of yours.
There are, however, those who deal with uncertainty better than others. If that describes you, then going through the home purchase then ahead and buy a house before you sell your current – you won’t be fazed.
Your Finances
Regardless of your personality, if you just don’t have the money to support two mortgage payments then you should sell your home before you buy a house simultaneously (we explain that process later).
The Market
A seller’s market is the ideal situation when you’re selling your current home.
In a seller’s market, when there are few homes available and lots of buyers competing for them, sellers are in the driver’s seat. This is great news when you go to sell your current home, but it may be a tougher process on the buying end.
With multiple offers, not many of sellers will accept an offer that is contingent on another home selling. Thankfully, the overheated market is correcting, so this may not be that big of an issue.
On the flip side, in a hot seller’s market, homes in good condition, located in decent areas, sell quickly. If yours is among them, you take on little risk if you purchase a new home before selling your current one.
Know if the current market caters to sellers or buyers before making the decision. I’m happy to share what I know so feel free to reach out.
The Simultaneous Close
Selling one home while purchasing another is a bit of a balancing act. If you try to time the closings to occur during the same time period, you run the risk of ending up with two house payments.
If you allow sufficient time between closings, on the other hand, you may find yourself renting a home and, thus, moving twice.
The ideal situation is to plan for a simultaneous closing, where both transactions occur on the same day. However, this process comes with risks. If anything should go wrong on the first transaction you could end up not being able to close on the second.
Not only will you not have the new home, you may be in default of the purchase contract and lose your earnest money deposit.
It’s important to choose the right buyers for your current home. How much do you know about their finances? How firm is their offer? What do you know about their motivation to purchase? How bad do they want your home?
Since the process is a bit like a string of dominoes, and the buyer of your home is the lead domino, it’s important to choose a buyer you know will complete the deal. Otherwise, if they fall, they take everyone else down with them.
The key to success is hiring an experienced, professional real estate agent. Your agent can guide you through the process, managing the transaction to keep it on course.
Just remember, to buy a house while you’re selling on is not for the faint of heart. Understand your personality and risk type before proceeding ahead.
