Thanks to tighter lending restrictions, buying a home can be tough. But it becomes even more of a challenge when you’re trying to sell a home at the same time. When the clock is ticking, you may feel a certain amount of pressure to accept an offer from a prospective buyer or settle for a property that’s not exactly what you want. If you’re ready to move to a new home while unloading the old one, here’s how to maneuver both transactions gracefully.
1. Know What Your Home Is Worth
Before you put your home on the market, it’s worth taking the time to research similar properties so you know where to set your asking price. Go too high and you risk scaring away buyers; go too low and you end up losing out on profits when you sell.
Enlisting the aid of an experienced real estate agent who knows the area can help you pinpoint what the sweet spot is. You may also want to get a professional appraisal to make sure you’re on the right track. Being clear about the home’s value can give you an idea of how much you stand to walk away with once the sale is complete.
2. Work Out the Financing Details for the New Home
Finding your dream home is a very small part of the home-buying process. You also need to make arrangements for how you’re going to pay for it. Getting pre-approved for a mortgage is a must before you put your home on the market.
Once you know the size of the mortgage you can qualify for, you can start scouting out suitable properties, always remembering to stick to your budget. You’ll also be able to tally up an estimate of what you’ll need for the down payment and closing costs.
If you’re going the conventional route, you’ll need to put at least 20% down to avoid private mortgage insurance. If you’re banking on the sale of your current home to cover the down payment on your new home, that’s yet another reason to make sure you’re listing your home at the appropriate price point. Otherwise, you’re going to have to be prepared to come up with the cash out of pocket.
3. Pick Your Battles Carefully
As a simultaneous home seller and a buyer, you’re probably going to be doing some negotiating on both sides of the table. For example, you may get an offer from a buyer that’s contingent on making certain repairs or paying a set amount towards the closing costs. You’ll likely have similar requests of your own when trying to hammer out an agreement with a seller.
The most important thing to keep in mind is that compromise may be a necessity if you want to get both deals done. If you’re not willing to grant minor concessions to your buyer or you won’t take no for an answer from the seller of the home you’re trying to snag, that could cause both parties to walk away, leaving you in the lurch.
4. Have a Backup Plan If Your Home Sells Early
One of the biggest obstacles to buying and selling a home simultaneously is getting the timing right. If your home sells before you’re able to close on the new one, you’ll need a place to stay in the meantime. To avoid any major upsets, it’s a good idea to make arrangements for temporary housing in case you need it. It may be inconvenient to move house twice but you’ll be glad to have somewhere to go if you’re able to lock in a buyer relatively quickly.
Buying one home while selling another can be a test of your juggling skills but you can eliminate some of the stress by planning ahead. Taking the temperature of the market, picking your battles, lining up your financing early on and having a backup plan are some smart ways to avoid unnecessary headaches down the line.