Many homeowners worry about how to manage the timing of putting their home on the market while also planning to make a purchase. Generally, it only takes between 30 and 60 days to close on a home, which isn't a lot of time to find a new place to live. To that end, it's understandable why this decision would weigh heavily on their minds.
With that in mind, below is a list of tips on how to buy and sell a home at the same time, as well as tips on what you should do if scheduling concurrent closings is not possible. Read on to learn more.
Know the risks of buying first vs. selling first
While, ideally, you should aim to have a back-to-back closing, where you'd close on your old home and your new home on the same day, that's not always possible. In case you can't make both your moves happen at the same time, it's important to know the risks of buying first vs. selling first.
Buying your new home before selling your old one can get tricky. In this case, there's a risk that you may need to use temporary financing -- like a bridge loan -- to pay for your new home. When your old home eventually sells, you'd then use the money from that sale to pay off the bridge loan. However, if something happens to your sale, you could be stuck scrambling to figure out how to pay off a huge loan.
Generally, selling first is considered to be the safer move from a financial perspective. In this case, you can feel confident that you'll have the funds in-hand to pay for your new home. However, you may need to invest in some temporary housing if there is a lot of time between when your house sells and when you're ready to buy.
Consider local market trends
Sometimes market trends may be able to tell you whether it makes more sense to buy or sell first. Your real estate agent will be able to tell you which type of market your area is currently experiencing.
In seller's markets, since there's less inventory available, there tends to be more competition among buyers for the homes that are for sale. You're more likely to get an offer sooner in those markets than in a buyer's market, so it may make sense to have an offer on a house before you list your current home.
On the other hand, during buyer's markets, inventory is plentiful, so listings tend to sit on the market for longer. In this case, it may be smarter to make sure your home is sold before putting an offer in on anything new.
Negotiate the closing date or a rent-back contingency
Keep in mind that when you're negotiating an offer, you'll have the chance to negotiate the closing date. This is your chance to arrange a back-to-back closing, where you move out of your old home and into your new one on the same day.
That said, if the closing date is your priority, you may have to be willing to compromise on other areas of the contract, such as the sale price or any elected contingencies. After all, negotiations are a give-and-take.
Another option is to try to negotiate a rent-back contingency. With a rent-back contingency, you sell the home to your buyers, but they then agree to rent it back to you for a set period of time. This option would allow you to only have to move one time. However, like anything else in negotiations, this is an ask. The buyers, unfortunately, aren't obligated to agree to it.
The bottom line
Managing the timeline of a move is one of the most stressful parts of buying or selling real estate, and the pressure is two-fold when you're trying to do both of those things at once. However, with a little forethought, it is possible to coordinate buying and selling a home at the same time. Keep these tips in mind to help you come up with the solution that works best for you and your family.