There are a select few of us who ever buy our dream home the first time around. For most of us, our starter home is a place of fond memories, of tight quarters, and one from which we are excited to “move up”. Because of this, it is highly likely that your life will find you selling one home and buying another at the same time.
Selling and buying simultaneously isn’t necessarily a difficult task, though it is one with numerous moving parts, each converging toward one main goal. If any one of the moving parts becomes stuck or moves in a different direction, it can throw off the entire mechanics. Therefore, we put together this quick step-by-step how-to guide on selling and buying simultaneously to give you a feel for how the process works.
Write Your Goals Down
The first step to successfully pulling off a simultaneous sell/buy is to have a firm grasp of what your overall goals are for doing so. Make sure you are crystal clear on two main things: the specs of the home you want and the general timeline of when you want all of this to take place. Trying to decide these things when you’re in the thick of it is a recipe for disaster, and can often lead you to feeling crappy about how everything is turning out.
Test Your Assumptions
Before taking the time to get your home ready to sell, it’s a good idea to make sure that your assumptions are correct about the value of your home and the price and availability of your new home. Make sure the spec list of the home you want can actually be had in your price range. If your reasons for moving into a new place are completely out of your price range (or are non-existent), it may be worth reconsidering your move. Conversely, if what you need from the sale of your home has one too many zeros on the end of it, you may need to stay until you build up more equity.
Get Your Home Ready to Sell
Assuming that your assumptions were correct about your current home’s value and being able to afford the want list of your new home, it’s time to ready your home for market. I strongly recommend getting a pre-listing inspection as well as hiring a professional stager. The inspector will tell you any major and minor problems you have before the buyer has the opportunity to find them on their own, and the professional stager will help your home look sexy and appealing to a wide audience of potential buyers.
Enlist a Team of Professionals
This is probably the most important step and would be at the top of my “tips” list. While you may not be delivering a baby, selling and buying together can be a complicated process. There’s no reason why you should try to do it alone when there is a team of professionals waiting to help you—ones who have done it before.
We’ve already talked about the pre-listing inspector and the professional stager. Next, you need to enlist your Realtor to provide market comparables of your current home as well as start sending you lists of properties that match your want-list for your new home.
You’ll also need to get pre-qualified for your new mortgage using the estimated proceeds from your current home as a down payment. Your mortgage professional will help you understand the types of loans available to you as well as your estimated payment for each. It is so important that you’re comfortable with your new payment; otherwise what’s the point, right?
The last professional you’ll want to hire is an escrow officer. The escrow officer handles all of the title-related items as well as the transferring of funds and recording of documents. They’ll be instrumental in making sure the proceeds from your current home go toward your new home. Ask your Realtor or mortgage professional for a list of recommended escrow officers.
Put Your Home on the Market
Now that your home is ready to sell, you know there are homes out there matching your want-list, and you are comfortable with your estimated new payment, it’s time to get your current home on the market. Luckily, your trusty Realtor handles most of this step, so you can sit back and daydream some more about your new home.
Negotiate Your Terms (and Ask the Right Questions)
Yay, you’ve found a potential buyer for your home! The best advice I can give you during this time is to make sure you have your goal sheet from step one handy. Remember, your reasons for doing this must remain in tact or there’s no point! Make sure you give yourself enough time to find a new home move out of your current one. Most buyers should be flexible with the closing dates so it shouldn’t be a problem. Allowing yourself at least three to four weeks to find your new property and another 30 to 45 days to close is best. Double-check with your mortgage professional about their turnaround times so you know you can meet the deadlines of your new home’s contract as well.
This is also the stage to get very inquisitive about your home’s potential buyer. Make sure they have already been pre-qualified by a mortgage professional. You don’t want to execute a contract with someone who doesn’t have the ability to follow through. Also, ask about their flexibility in case any hiccups arise during the process. Get everyone to have their inspections ASAP so they’re out of the way, and let the period between inspections and closing be longer. This ensures most of the surprises are out of the way and dealt with.
Find Your New Home
Now that you’ve got a new buyer on your home, it’s time to accelerate your efforts. Hopefully you’ve been receiving property updates from your Realtor for some time now, so you’ve got a really good idea of what you want and where to find it. My best advice for you during this stage is DON’T BE GUNSHY. If you find a home that meets your criteria, pull the trigger. Execute on your new sales contract with confidence. Make sure the dates for inspections, loan denial, and closing are in line with your mortgage professional’s timeframe as well as the timeframe of your current home’s buyers. When you’re writing up the contract on your new home, have it reviewed by your mortgage professional and escrow officer before having your Realtor submit it. This will help make sure everyone is okay with the plan you’re about to set in stone.
Coordinate the Party
Once both contracts are executed, the process is pretty straightforward. Your new buyers will be working on their loan and getting ready for their big move, your Realtor will be guiding you through the inspections on your new home as well as negotiating any items on your current home. Your mortgage professional will be working on getting your loan approved and tidied up. The title company will be making sure everyone is on track for an on time closing. And you’ll be packing up and getting ready for the big day.
Close and Move
Well, you made it to the end! Everyone’s loans are approved and ready, the boxes are packed, and it’s time to close. The title company really takes the reigns on this step. They get all parties to come in and sign the documents required. Then, they get everything approved by the lender, transfer all of the funds where they need to go, and record all of the final documents with the county recorder’s office. Once this is done, the keys are yours and you can move in!
The act of selling one home and buying another may seem like a difficult task, but it’s really just an exercise in organization and teamwork. Remain very clear about what you want and need through the process. Hire the right people to help you navigate the waters (waters they’ve sailed before). As problems come up, utilize their expertise to guide you through. And most of all don’t make it a bigger deal than it needs to be.
Thank you for the lovely complete information that will be helpful to so many! Hope you are doing well!!
Thanks for your comment, Tom!
Good info. Easy to understand and pass on to Buyers. Thank you.