Selling a home while trying to buy a new one at the same time is hard. For various reasons. First, if you sell your home before you purchase one, you’ll have to live with family, or rent. You won’t be able to negotiate a clause where “you can move in when I find my dream home.” It’s also tough, because most people can’t afford to buy a house before they sell the one they’re in. Here are some ideas on how to sell and buy a home simultaneously. Watch: How to Purchase a Home While You Still Own One.
The reason most homeowners sell one house in exchange for another is because they don’t have enough income to carry two mortgage payments, don’t want to be a landlord renting the property or they need the equity for the down payment. Whatever the circumstances, here are some important aspects to consider.
Get pre-approved. Have the lender pre-approve you as though your current home is already sold. By having the lender omit your present liability, your projected debt ratio is reduced, making you look better on paper. This pre-approval may even include the down payment coming from the sale of your current home.
You should get professional real estate representation. Your listing agent can represent you on the buy side on your new property, facilitating a successful and smoother process for both transactions because they can communicate with the other agents as the intermediary, solidifying both sales through the close of escrow.
Real estate professionals know that when one property selling in exchange for being able to perform another — is weaker than if there is no contingency. While this is certainly true, contingent offers are becoming more common. Releasing financing contingencies at the same time. This is a crucial aspect to the real estate contract. In most real estate contracts, you fully commit yourself to purchasing the property at 17 days.
During the first 17 days, it’s expected of you as the homebuyer to make sure your lender has loan approval. After your loan is approved, release your contingency at the same time the buyer of your home releases their contingency, that way you don’t release contingencies on a property, risking the possible forfeiture of your initial earnest money deposit if the buyer of your property can’t perform. For further reading: Selling & Buying a Home at the Same Time.