Buying a home for the first time is an exciting and rewarding process. Now, you are ready to sell your current house and move into a new one.
However, you have a current mortgage hanging over your shoulders that you did not have as a first-time buyer.
This may seem to complicate the process a bit, but it is easier than you may think!
Here is what you need to know about buying and selling a house at the same time:
You do not necessarily have to deal with buying and selling synonymously.
- Sell your house first and live in a short-term rental while shopping for your new home.
- Buy your new house first and sell your old one while living in your new home.
- Use your old house as a secondary source of income and rent it out until you are ready to sell.
The issue with the first option is that short-term rentals are hard to come by and you would find yourself having to move your belongings more than once.
If you go with the second option, you will have to be able to afford two mortgages at once which is not in everyone’s budget.
Option number three might involve more work than you are willing to put in between collecting rent and dealing with tenants unless you hire a Property Management company.
Your best bet might be to buy and sell at the same time.
Knowing your local Real Estate market
The easiest way to avoid disaster when buying and selling is to know the market in which you are selling and searching.
You should be asking your Real Estate agent these questions:
- Are we in a buyers’ or sellers’ market?
- What is the median listing price in my neighborhood?
- At what rate and price are homes selling in the area I am looking to purchase in?
- Should I hire an appraiser to price my home?
- Would a pre-inspection report benefit me in this current market?
- How can I make my offer strong?
Also, keep in mind you may have to bite the bullet and list your home for lower than you would like if you are trying to time your home sale and new home purchase just right.
The rent-back agreement
If your buyers and your lender are willing to agree to a rent-back agreement, this could be your best route.
With this agreement, you can stay in your house you are selling after closing on the home with the buyers. You would then pay a monthly rent to your buyers for an agreed-upon amount of time.
This will allow you to eliminate one mortgage and have time to buy a new house.
The buyer can charge a refundable deposit just like a landlord would for any damages that may occur while you are still living in the house.
In short, working with the right Real Estate agent and playing to the local market’s strengths and weaknesses will determine your success in buying and selling at the same time.
Research your options, get your finances in order and set out a timeline so you can be prepared for any obstacles along the way.