Do you currently own a home and plan to buy another house but aren’t sure how the process works? In this episode of Highest Or Best, I’m going to show you how to buy a new home and sell your existing one at the same time. We’ll discover why timing your transaction is crucial and help you understand exactly how it all works.
The Importance Of Timing
If you’re a homeowner that wants to trade up or trade down into a new home, you’re probably curious about how to do it. You’ll likely need to sell your current home first because that equity represents your downpayment. This type of transaction can be tricky, so it’s important to plan so you can save you thousands of dollars and tons of unneeded stress. If you don’t plan correctly, you could find yourself in between closings—which essentially means you’re temporarily homeless.
When you’re buying and selling a house at the same time, there are a lot of moving parts. Some of these parts may be contingent upon one another. To help you make the best moves, we’re going to cover what you need to do to stay out of trouble—and that starts with timing.
Timing is the most crucial part of your transaction and is key to being successful. You’ll need to time your sale and your purchase just right.
Do You Need To Sell To Buy?
The first question you want to ask yourself is, ‘Do I need to sell my house before I can get a mortgage to buy my next home?’ If the answer is no, the transaction can be timed in many ways based on your overall goals; you’ll have a lot more flexibility.
I can walk you through the many different ways to make this happen, but you’ll still want to time it as well as you possibly can. Ideally, you’d sell your house within 30 to 45 days of closing on your new one. However, if you do need to sell in order to buy, that’s where things become a little bit more challenging.
To ensure a seamless transaction, it all comes down to timing. In a perfect situation, you do not want to be under contract on a new home to purchase until after you’ve received an offer on your existing home for sale. You’re going to need to time it so you close escrow on your current home before you close on your new home. This will allow the debt to clear on your name so you can secure a new mortgage.
Getting And Making An Offer
Another factor to consider is that you will have more purchasing power as a non-contingent buyer when you attempt to buy your next house. If your home is not under contract yet, it’s going to make your offer weak in the eyes of the seller. But if your home is already under contract, a seller will be much more likely to accept your offer.
The best way to do this is to loosely start to look for your new home while your existing home is listed. If your listing is going to get an offer relatively quickly, you can be more aggressive on that home search. Conversely, if your home isn’t getting traction in the market, you may need to slow it down a bit and identify why it’s not selling.
In a perfect world, you would receive a contract to purchase your existing house before your contract to buy your new home. The contract date on the sale of your house would be lined up to be before the purchase of your new house. While there are many different situations, this is a general idea of how to make it all work.
Getting Into Your New Home
This type of transaction definitely needs planning and strategy to accomplish it with the least amount of headache possible. The good news is that not only do I deal with this all the time, but I have some truly innovative approaches that help solve a variety of situations. I would love to help you, so please feel free to reach out.
I hope this showed you the importance of timing in this type of transaction and in getting the proper representation. Of course, there are many moving parts when you want to buy and sell a house at the same time. I haven’t covered all the specifics here, but I can answer any further questions you may have and tailor an exact plan of action just for you.
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