Buying and selling a home at the same time can be a complicated and stressful process, but with proper planning, the assistance of experienced professionals, and a few deep breaths, you can get your present home sold and purchase your new home on time, on budget, and with minimum stress.
This guide draws on the PiperPartners Team’s years of experience in helping our clients improve their quality of life through making important home buying and selling decisions. This guide is intended to help you make great choices and get the best possible outcome for your family and loved ones regarding your move. There is no right or wrong way to buy and sell at the same time, but there is a way that is right for you! Read on–we will help you discover that path as well as give you lots of tips along the way.
Are you ready for this? If you received a full-price offer today on your existing house, would you be ready to move?
“Working with PiperPartners was truly a blessing for us. My husband and I are both retired and were a little hesitant about making such a big move. We knew that we needed to be in a one-story home because of health issues. Our agent Andy helped us every step of the way. He walked us through the process of selling and buying our new home. He treated us like family and shared his team at PiperPartners with us. He assured us that if we couldn’t reach him then they would be there for our assistance. They took care of us from beginning to end. We had been in our new home for about two weeks when, guess who showed up, our agent Andy with a gift. Thank you PiperPartners for making this transition smooth and easy for us. God bless you.”
-Catherine and Ed Thomas
By doing the work and preparation up front, your move will go smoothly each step of the way.
There are as many ways to approach your buy-sell move as there are households. Some people can gear up for a move very quickly and be seemingly unimpacted by it. Others may require years to get ready and find the process stressful and difficult.
The work of buying and selling at the same time falls into three major categories:
1. Physical: Preparing your current home for sale and moving the household.
2. Financial: Estimating a profit or loss from the sale of your current home, determining what you can afford in a new house, financing your new home, and tax and long-range financial planning needs.
3. Emotional: Your home is much more than a building or an investment. Your home is where you live your life. Your memories and experiences are rooted here. Understanding the emotions that can surface during the move will help you better manage the stress of moving.
Each of these categories has their own requirements during your move, which this guide will outline for you.
Preparing a home for sale and moving is a lot of work! If you have not moved in many years, there are three important things to consider:
1. Ten or twenty years may have gone by, and now you are older! You may not have the energy and the mobility you used to have. Or, you may have three kids under the age of five now, plus a dog, two cats, and a hamster. How much more can you do? Be realistic about what you can and can’t do. And get help. The last thing you need right now is an injury that derails the process or causes your family to have a meltdown.
2. You have likely accumulated a lot of stuff. Your real estate agent can provide a list of resources to help you donate or dispose of items or find people to assist with the physical work of moving. Work with your agent to figure out which items in your home should stay and which ones should go (either into storage, sold, or given away). The goal is to prepare your home strategically so that it will show at its best. This generates the best offers from the highest quality buyers.
If you are selling a family home where adult children live, get them in the game early and engage them to help out. Adult children living at home often have a lot of personal items stored in Mom and Dad’s basement, attic, or closets. Make sure they have a chance to find their cherished items and give them a new home. Give these kids a deadline, too. They may have an interest in these items, but no interest in doing something about them! Give fair warning of your intent to purge, and stick to it.
3. Home repairs and updates. If you have owned your home for a long period of time, chances are you have put off some maintenance or neglected some updates that should be reviewed. A highly qualified real estate agent can help you understand which repairs are worth the money, which ones are a waste of money, and which ones will help your home sell faster and with less hassle. Your agent can recommend qualified tradespeople for:
- Handyman repairs
- Plumbing and electrical
- Heating and cooling
PiperPartners maintains a list of contractors that are consistently available for our clients, offer reasonable rates, and have a track record of excellent customer service.
To have success in the financial aspects of moving, there are the five professionals you will want in your corner to assist you in buying and selling a home at the same time:
1. An Experienced Realtor
This is your key resource throughout the process. You must feel comfortable with this person and choose someone with a strong track record in handling these complex moves. This is not the time to hire your friend, neighbor, or relative that just happens to have a real estate license. This person will be with you from one end to the other.
Your real estate agent or team will:
- Assess condition of your current home.
- Make repair recommendations.
- Determine the value of your current home and explain the impact that repairs will have on value with a high degree of accuracy,.
- Determine marketing time to sell.
- Market and sell your current home.
- Determine proceeds from the sale.
- Assist in identifying target neighborhoods and homes to purchase.
- Make purchase offers.
- Negotiate contracts on both ends.
- Coordinate the move.
- Keep all parties to the transaction on a timeline and performing.
2. An Experienced Home Mortgage Lender
Choose wisely, as this person will qualify you for the new home purchase, help you understand your payment and financing options, guide you through loan underwriting and appraisal, and help you stick to your timeline. An experienced realtor will be able to recommend a trusted lender.
3. Your Financial Planner
If you already stay in touch with your financial planner, be sure to check in now that you are planning to move. Share the news with them and get feedback on how the move might impact you right now as well as in the long-term. Review your long-range financial goals and make sure this move aligns with them. And, of course, discuss how you are going to fund the purchase of your next home, whether it is with or without a mortgage.
4. Your Accountant
Reviewing your circumstances with your accountant is always a great idea, but even more so when you are planning a move. Buying or selling a home can create income tax consequences, so knowing how you may be affected in advance will help you to make smarter decisions and be better prepared.
5. Your Attorney
Be sure to consult with your attorney when it comes time to enter into a contract or for family law matters that can be affected by your move. This is especially the case if you are divorced and have full or shared custody of children, plan to move out of state, or are moving because of a divorce and assets are being separated.
If you have been in your present home for awhile, you may experience some strong emotions as you prepare for this move. You’re human – it’s going to happen! Recognize that you might have some memories and feelings surface after all these years in this home and allow yourself time to work through them. It’s only natural.
If your move is more abrupt because of a sudden job transfer or family situation, take time to talk to all family members about what is happening. Get everyone on board as much as possible about the transition and focus on something positive that awaits in your new home.
We have worked with sellers, particularly downsizers, who began the process of selling a family home only to realize that they were not ready to move! It’s better to come to this conclusion sooner rather than later, before that precious home hits the market.
Moving causes stress! Most likely you are moving for reasons that involve major life events – positive or negative – and this causes stress. With stress comes the likelihood of illness. Understand the stress you will be under because of this move and be as ready as for it as you can be.
Most of the people we help with major moves are moving because of a major life change, including:
- New job or loss of a job
- Financial reasons – need to cut expenses, long-term financial planning
- Death or illness of a spouse
- Marriage or divorce
- Change in family size – birth, adoption, two families joining together, downsizing after the kids leave
These are all among the top ten most stressful life events. Now, if you also add selling a home AND buying a new home to any one of these, you have a situation that requires careful consideration and the help of a top professional to help you plan your move.
Strategies to consider for buying and selling homes at the same time.
1. Sell first, get temporary housing, then shop for and buy your new home.
This option will give you the most flexibility and negotiation power on the buying side as you will not have to make an offer contingent on selling a home. You will either have to get a lease and scramble to find new housing, or find temporary housing. When moving to a new market or area of the country, it could make sense to lease an apartment, townhouse or single family home for a year and search for a home after you arrive and have had a chance to get to know the area.
If you do take on a lease, you may want to ensure there is an out clause for purchasing a home. Often this will cost you a month or two of rent, but it gives you the flexibility to shop on your terms in the new market.
Renting before buying also allows you to take your time and explore more options or possibly consider a home that needs work and may need several months before it is ready. Homes that need work can help you quickly build equity in a property if you have the time and knowledge to manage such a project.
On the downside, you may incur additional expenses for storing your household items and moving twice by choosing this option.
2. Sell and buy at the same time
Selling and buying at the same time is the most common way that our clients move when they already own a home. We have completed many of these transactions for our clients, and we know what it takes to successfully guide buyers and sellers through the process and achieve excellent results while minimizing stress and uncertainty.
Case Study – Candice and Dwayne Hunter
“We just had a baby and it was getting crowded in our condo so we reached out to the PiperPartners team to sell our condo and buy a new home at the same time. Our biggest worry was that we would not have a new home to move into! Tanya and Andy were very experienced about buying in the Ypsi / Ann Arbor area, preparing a home for sale, and preparing for a move.
Thanks to your guidance we found a buyer for our condo in a couple of weeks with flexible occupancy after closing and then we were quickly able to find a highly functional new home with all the spaces we needed.
We did not realize how overwhelming the process was – it was VERY overwhelming! Your team addressed all or our concerns each step of the way and was always available by email and phone. When you gave advice, we listened and it paid off.”
In reality, it is impossible to actually both buy and sell a home simultaneously! In real life, you close on your current house and then immediately close on the new home. The proceeds from your home sale are immediately applied to the new purchase.
Generally, you have less bargaining power with this scenario since you will be using the proceeds from the home sale as the down payment on the new home. That means that your purchase will be contingent on closing your current home. In a hot sellers’ market, sellers won’t consider this option or you will have to pay a premium to get an accepted contract.
However, you may have something to offer the seller that could make your offer more appealing, such as a leaseback option or flexibility in closing dates. Your real estate agent can help you explore these options and help you best position your offer.
The biggest danger with this option is that your current home could close while the new home purchase falls through. You will want to get the contingencies cleared on the new home purchase before closing on your existing home.
When buying new construction where there is a 6-9 month lead time on the completion of the new home, sellers will put a downpayment on a new home and then market their existing home for sale 3-4 months prior to closing on the new home. This works best when the home is highly marketable and in a sellers’ market. The risk is that market conditions can change quickly and without clear signals. In the worst case, you may not be able to close on the new home if your current home doesn’t sell. Then you will financially carry two homes at once or lose your deposit on the new home. Many people buying new construction will sell first and then find a short-term lease to fill the time until the house is ready.
In reality, this is how most of our sell-buy transactions take place. Most people do not have the financial ability or risk tolerance for carrying two homes at the same time in the event that something should go wrong.
3. Buy the new home and then sell your existing home
If you own your home free and clear, this can be the least stressful option. This allows you the most flexibility because you can purchase the new home, make repairs and improvements before moving in, move your household to the new home, make improvements and repairs on your existing home while it is vacant, and then market the home for sale.
A variation of this involves bridge loan financing. Bridge loans are temporary loans that bridge the gap between the sales price of a new home and a home buyer’s new mortgage, in the event the buyer’s home has not yet sold. The bridge loan is secured to the buyer’s existing home. The funds from the bridge loan are then used as a down payment for the next home.
Bridge loan financing used to be a popular option, but the great recession of 2007 took most of the fun out of it. We find that people just don’t have the risk tolerance for bridge loans and there are also expenses to consider. Before 2007, the popular belief was that the housing market just went up! The recession allowed us to realize that the housing market is like any other market: it goes up and down and is cyclical. Thus, home sellers are very cautious of being caught in a market downturn with two home payments.
1. Hold out for the best home for you and your family. Your home is the place to live your best life! That should always be your first consideration. Find the home that is the best fit for you and your family and settle in! A great real estate professional will be a great listener and be able to understand your needs and make short work of finding you the perfect home for your lifestyle, budget, and desires.
2. Buy within your means. Get with your financial planner to set and consider your long-term financial objectives. These days, fewer and fewer of us have company 401k’s. You have to remember to fund your retirement, and you are going to live longer, on average. So, keep this in mind. Lenders often don’t consider this fact in determining your mortgage limits.
3. Buy for the long haul, if you can. Selling a home and moving is expensive. If your time horizon is less than three years, purchasing can be risky. If your time frame is seven years or longer, you are most likely going to make it through a full housing cycle. Based on history, you will be making a sound financial decision.
4. Get organized. Start by getting rid of as much as possible before moving: household goods, clothing, furniture, and anything that is worn out or unused. Don’t move it. Get your financial documents in order and shred and safely dispose of what you no longer need. Meet with your preferred professionals up front and go through the entire process. Keep good records and receipts during your move and document the expenses of fixing up the house you’re selling as well as the one you are buying.
5. Be systematic. Follow the plan your real estate and professional advisors set out for you. They can guide you through the process and significantly reduce the stress. Expect to get clear advice every step of the way, and in advance.
Now, that doesn’t sound so bad after all, does it? Buying and selling a home at the same time is do-able with minimal stress and struggle if you arm yourself with experienced professionals to guide you every step of the way. With a little strategic planning, your goal of selling your current home and buying another can be a smooth process and result in the lifestyle you have always dreamed of.
The first step is to consult a qualified real estate professional, like those at PiperPartners. Ready to take that first step? We’re ready to help. Give us a call at (734) 845-9700 or fill out the form below.