Homeowners

How to Buy and Sell a Home at the Same Time

Anyone who has been through the homebuying process can tell you that it's not without occasional challenges. Adding the stress of selling your current home at the same time may seem like too much to deal with all at once.

However, there are a variety of ways that homeowners can make it easier to complete back-to-back real estate deals when they trade up, downsize, or relocate into new homes.

Submitting contingency offers and all-cash offers and using bridge loans are just a few of the many ways that homeowners can simultaneously sell their properties and buy new ones.  

"Don't wait. That's one of the most important parts" of buying and selling at the same time, said New American Funding Branch Manager Dwayne Graham, who is based in Sugar Land, Texas. "A lot of people wait until the last minute because they think that they have time."

Graham said that unexpected "issues" can arise in deals with so many moving parts. Getting started as early as possible can help prospective buyers and sellers figure out any potential issues well in advance.

So, once you're ready to trade in your home for a new one, how can you make the buying and selling process easier?

Buy your next home with cash

Homeowners who want a hassle-free buying and selling experience may want to purchase their next properties in cash.

All-cash offers are often the most attractive to home sellers. In a buyers' market, sellers often believe these offers are the most likely to close. That's because these deals won't get tripped up if the buyer has problems obtaining a mortgage. These deals often close faster as well.

Buyers who purchase in cash may be able to lock in lower purchase prices, particularly on properties that may have been on the market for a while.  

"When you're using cash, you can negotiate and offer a lower amount, because again cash is king," Graham explained. "[Cash is] more enticing than going through getting the financing in place, going through the underwriting and closing in 45 days."

Using a bridge loan to buy and sell a home at the same time

Homeowners who don't have that much money available or don't work with their lenders to make cash offers may want to consider financing their next purchase with a bridge loan.

Bridge loans are just what they sound like a loan with a short span that helps you purchase your new home before you have sold your current property.

Often offered with loan terms of six months to a year, these loans offer quick funds.

The downside to these loans is that it can get expensive very quickly to make both your monthly mortgage payments plus your bridge loan. Bridge loans also typically have higher interest rates than traditional mortgages.

Still, if time is of the essence, you may find the quick cash useful.

Adding a home sale contingency to your offer

Homeowners who don't have cash and are wary of paying for two mortgages at the same time may want to consider adding contingencies to their offers when they're buying their new homes.

A home sale contingency says that the buyer will purchase the seller's home provided they can sell their own first.

Not surprisingly, a home sale contingency greatly reduces the likelihood that a seller will accept your offer because they're not sure if you will wind up buying the home. This is especially true if they have other buyers who are interested in the property.

"Sometimes whenever the seller sees that there's a contingency sale, they don't want to deal with it," Graham shared. "The potential exists for something to go wrong."

Still, in a cooling real estate market where homes are sitting longer, some buyers may be open to a contingent deal. 

"When things were really, really busy, sellers would look for offers that didn't have any contingencies," Graham said. "In today's market, because it's not as hectic as it was before, there might still be some disadvantages but not as much as it was before."

Using an extended closing contingency to the sale of your home

Homeowners may want to add a contingency to the sale of their own homes. This can give you time to purchase another property before you need to move out of your current home.

Still, the delay carries risk. It can scare away buyers who are looking to move in quickly. These are the same sort of buyers who might be willing to pay more to get a deal done.

"The timing has to work," said New American Funding Loan Officer Yvette Masi. She is based in Brentwood, Calif. "There's another layer of risk for the deal."