Looking to move up and buy a new house while selling your old one?
Well, then, brace yourself for one of the greatest high-wire acts in real estate.
Always tricky, selling one home while buying another is even more so now amid the toughest real estate market in decades.
Even if you can line up a buyer and find your dream home, you still have to get the latter financed, and that's no cinch given how jittery even the best mortgage lenders are these days.
"It is a balancing act and it's very challenging," says Pauline Donnelly, a vice president at Coldwell Banker in Boston. "It's a rare person who is in position to buy something before they sell their home."
If you're ready for your next home but need to sell your existing one first, consider the following:
The closer you are to actually selling, the easier it will be to buy: As a general rule, if you are looking to buy up, you had better have your house on the market, or no seller will take you seriously. If your house is for sale, but you don't have a signed contract yet, you are still likely to meet skepticism, though you might be able to work out a contingency deal that gives the owner of the home you want to buy the freedom to move ahead if a better offer comes along.
Don't be surprised if the seller's real estate agent even pokes around your listing to see if you have priced your home right, notes Jim Hamilton, vice president for the National Association of Realtors' Region 13, which covers California, Hawaii and Guam. Even with your own house under contract, the seller of the house you want to buy may ask to see the deal--and you should accommodate the request as much as possible, Hamilton advises.
Be prepared for the unexpected: Even if you do everything right, you are just one link in a chain of sales. All it takes is one slipup by any one of these buyers and sellers and the whole chain may snap. A delay in the closing of one sale can trigger a whole series of delays down the line, so you have to be ready to scramble. Mortgage lenders, among other things, have become much less predictable. "Financing doesn't seem to go on time anymore," laments Mitch Ribak,broker owner of eHomes Realty Network and Tropical Realty of Suntree, Fla.
Don't let the process rush you: Trying to sell your house and buy at the same time can compress the house-hunting process to a month or two. While some of us thrive under deadline pressure, it is not exactly an ideal way to find the house you hope to call home. If you are pressured just to pick a house, any house, to keep your twin transactions on track, then it may be time to step back, Donnelly cautions. "I am finding some of my sellers are getting smart and having a contingency plan to live somewhere and buying when the sale is done," she says. "It takes a huge amount of stress off your shoulders."
Consider focusing on selling first, then buying: In theory, this is the best way to buy your next home. Unencumbered by the need to sell your own house, you have cash in your pocket and you are ready to move quickly. You are a seller's dream! Of course, there is one small wrinkle in this happy scenario--after you sell your house, where do you live? The obvious answer is a short-term rental or a relative with extra space, but the prospect of making two moves in a matter of months may be simply too daunting for some families, Hamilton says.
If all else fails, rent your house: This has become a popular option amid a slower real estate market. Instead of waiting for months or even years for a buyer to show up, some are opting to rent out their home so they can be freed up to buy elsewhere, Ribak observes. The first call should be to your lender to see if you can get approved for a mortgage on a new house while you rent the old one. You will likely need a signed lease for the bank to take you seriously, he notes.
So yes, even now, with home sales skidding along the bottom, you still can sell and buy at the same time. Yet it is hardly the ideal way of shopping for a home. If you have the patience, you are probably better off selling first and then buying, even if it means living in a short-term rental, Hamilton contends.
"That is the strongest way you can do it as far as purchasing power goes," he says.