Buying a new home? Exciting! Selling your current one? The start of a new adventure! But doing both at the same time? That's more of a challenge. You'll need to balance timelines, finances, and negotiations while keeping stress levels in check. But you can absolutely handle it with the right plan — and the right professional team — in place.
Step one? Take a deep breath. These transitions can feel overwhelming, but remember that most homeowners go through this process at least once, so there are guidelines to follow. Here's where to start.
Know your options.
Whether you end up buying first or selling first, there's no right or wrong option. But it's important to understand the implications of each.
Buying first gives you ultimate flexibility. You don't have a deadline on your home shopping, and if you don't find what you want, you can postpone selling. The downside is the financial burden. You'll need a down payment for the new home, and until you sell, you could be carrying two mortgages.
Selling first frees up your finances, but you'll need a place to stay until you take possession, and your shopping process may feel more rushed.
Run the numbers.
Your decision making likely starts with money, so talk to your Loan Officer about your home financing options. In addition to how much you can afford on a new home — and how you'll get the funds for a down payment — talk about what to do if you need to carry two mortgages for a while. If you plan to buy before you sell, verify that your current mortgage payment won't affect your ability to qualify for a new loan.
Find the right real estate agent.
You'll also need to interview agents before choosing who you want to work with. Focus on finding a listing agent first, because that person will help you determine the market value of your house — a key component in your financing scenarios. (You can use the same agent to represent you in buying your new home, or you can work with a separate buying agent.) When you talk to potential agents, ask them about their experience guiding clients through buying and selling at the same time. Ask them not only about their successes, but also how they helped clients when complications arose.
Make fallback plans.
Since you don't know whether you'll close on your current home before you find your new home, make sure you understand your options for bridging the gap between transactions. Common scenarios include:
Offer with sale and settlement contingency: If you're buying first, you can put in an offer on a house, but with a condition that you'll only complete the purchase after you sell your current home. If your home is already under contract, and you just need time to get to closing, this becomes an offer with settlement contingency.
Extended closing: If you're ready to buy and are confident that your existing home will sell quickly, you can negotiate to extend the closing date of your new home beyond the standard 30-45 days.
Rent-back agreement: If there's a reasonable gap between when your home's buyers want to move in and when you can move into your new house, you can offer to rent your current home back from the buyers for a set period of time.
Your agent can go into details about these and other arrangements, as well as the likelihood of securing each one. Your odds will depend in part on whether market conditions favor buyers or sellers.
Prep your home ... and your move.
Here is one area where your goals come together seamlessly. Decluttering is the first step in making your home appealing to buyers and boosting potential resale value, and it's also the first step of a successful move. Purge your home of everything that doesn't work (broken appliances, clothes that don't fit) and sell or donate anything you don't want to transport to your new home (appliances you don't use, excess furniture). Then pack everything you don't need before the move and store it offsite, ideally in a moving pod that can be transported straight to your new place.
Tip: Talk to your agent about whether your home sale would benefit from hiring a professional stager.
Be agile.
Because you're negotiating two major transactions at once, you'll need to be able to act quickly as events unfold, so talk through all your options with your Loan Officer, real estate agent, and any other decision makers involved before you get started. Clarify your non-negotiable needs versus what you're willing to negotiate. That way, when you reach a decision point, you'll be ready to act.
Good luck!