Eight Tips to Make the Simultaneous Buying and Selling Process Easier
The process of moving can be a lot more complicated when you need to buy and sell properties at the same time. But not to worry: we’ve got eight ways to keep your stress levels minimal while you take your place as both buyer and seller.
Here are our top eight tips for selling your house and buying another at the same time.
1) Get the Right Real Estate Agent
You’re unlikely to close a sale on your current property at the same time as closing the sale on your new dream home. However, a professional who understands local real estate trends can help you to time the process as efficiently as possible.
Choose a reputable real estate agent who is familiar with the market situation in both your location and the location(s) that you are considering moving to. The right agent will be invaluable to closing both of your sales as a buyer and as a seller.
An effective real estate agent can:
- Identify whether locales are better for buyers’ or sellers’ markets.
- Give you an idea of how quickly properties are selling in a particular area and at what prices .
- Advise you on your property’s listing price.
- Help you to decide on a buyer budget.
- Assist you in managing timeline expectations and negotiating the length of your close.
- Offer guidance on rent-backs, short-term rentals, and loans.
- Provide advice on mortgage options.
- Contact sellers and/or sellers’ representatives on your behalf.
You should aim to work with the same real estate agent for both the buying and selling processes. You need someone who has a holistic understanding of your overall situation because your buying and selling processes will cross over.
Only use different agents for your buying and selling channels if you are moving out of your agent’s area of expertise. You should also ensure that you don’t work with the same agent as the seller of your new home.
2) Set Your Listing Price and Budget for Your New Home
There are two figures that you need to give a lot of thought to when you buy and sell properties at the same time. The first is the listing price of your current property. The second is the budget for your new home. Make sure you weigh your budget against the market value and leave space for a buffer.
A real estate agent will be able to help you to align these figures. They will also advise you on how to cover the costs of your new home through your property sale.
3) Determine How You’ll Pay the Deposit on Your New Property
If you want to buy and sell properties at the same time, you’ll need to determine whether you have enough funds for a deposit on a new property. Deposits are typically three to five percent of the purchase price of a property. If you don’t have enough cash on hand, you can speak to your lender about securing a deposit to purchase a new property using the equity from your current property.
4) Calculate Whether You Can Cover the Down Payment on Your New Property
If you can’t afford the down payment for your new home until you have sold your property, you can take out a bridge loan. These loans cover you if you haven’t sold your property when you move into your new home and must pay for two mortgages. A real estate agent will be able to advise you on securing a bridge loan best suited to your situation.
5) Opt for a Conditional Sale or Contract Contingency
This route makes the purchase of your new property reliant on the sale of your home. Though this can be a solution, you should seek advice from a real estate agent before taking this approach. Conditional sales can hinder a seller’s chance of selling their property if the sale of your property falls through. Therefore, conditional sales aren’t always the best option, especially not in competitive marketplaces. If a seller is to agree to a conditional sale, you’ll need to convince them that you will be able to sell your home quickly because of its price and market desirability.
6) Secure a Mortgage Pre-Approval
Don’t assume you can afford a bigger home just because you have a current mortgage, down payment, or particular income. Unfortunately, these factors don’t always equal absolute certainty when upgrading your home. However, securing a mortgage pre-approval can save you from disappointment when you’re ready to invest in your dream home. You’ll find it much easier to secure a purchase if your mortgage is pre-approved.
As Tracy Valko, owner and principal broker of Dominion Lending Centres, explains: ‘Every week, as many as 40% of my new clients come to me because they’ve just bought a home and discovered that mortgage pre-qualification is meaningless and that they do not have the financing required for the purchase.’
Don’t let this be you. A pre-approval is different from a mortgage pre-qualification. A mortgage pre-qualification is a first step to getting a mortgage—one that gives you a rough idea of how much you can borrow. To secure a pre-qualification, you need to explain your income, assets, and debts to a lender, so that they can give you an estimate of what you can afford. Meanwhile, to get pre-approved, you have to provide your lender with a lot of documents and fill out a mortgage application. It’s a thorough investigation of your income, assets, credit history, rental history, and debts. A pre-approval will give you a concrete idea of what you can afford property-wise—according to your lender. When you’re pre-approved, home sellers take you seriously.
Most approvals are valid for 120 days at a static interest rate. Keep in mind, though, that your mortgage approval could be affected if your employment status, income, or down payment changes.
7) Make a Plan B, Just in Case
Buying and selling property can be unpredictable, particularly when you’re involved in both ends of the process. If you can’t align your sale and your purchase, you’ll need a plan b. The gap between selling your home and closing your purchase can leave you paying for two mortgages or without a home at all.
Ideally, you’ll want to close on your purchase before you close on your sale—even just a week or two earlier. This will give you time to make any changes or updates to your new property (if necessary), but may require a bridge loan if you don’t have the funds to carry both properties at the same time.
Keep an emergency fund to one side—you may need to book a hotel or short-term rental accommodation, such as an Airbnb, for a week or two between selling your property and moving into your new home. Alternatively, you may be able to arrange a short stay with family or friends until your new place closes.
8) Plan a Closing Date and Time
If you’re lucky enough to be able to move out of your house and straight into your new property, strategically choosing a date and time for the move can make those final transitions seamless.
Where possible, don’t schedule your move for a Friday. If there is an issue on closing day, you’ll have to wait until the next business day to close. That means waiting through the weekend.
You should also keep in mind that bank transfers usually take up until three p.m. on closing day. Schedule your movers accordingly.
These buffers can help you to close your deal in a timeframe that best suits you.
You’re Ready to Buy and Sell Properties at the Same Time
With these tips, you’re ready to start your property journey as both a buyer and a seller. You’ll have some major decisions to make, and you won’t always be in control. But with support and guidance from an experienced real estate agent, both of your sales can move forward as smoothly as possible.
Get in touch with Storey Collective to speak with a real estate agent about your buying/selling options and plan for a stress-free move.