Tips on Buying and Selling a Home at the Same Time

Tips on Buying and Selling a Home at the Same Time

With careful planning, buying and selling a home at the same time can be a lot easier than you might think

Here are some tips to get you started.

Preparation

• Hire a team of professionals who are experts in buying and selling homes. Ask family and friends which REALTOR®, lawyer, lender, appraiser, home inspector and mover they’d recommend. Meet with them and discuss your objectives, requirements and expectations right from the start.
• Communicate with your team of professionals efficiently and regularly. For instance, more and more buyers are asking their REALTOR® to e-mail new home listings to save time and ensure they don’t lose out on a property that sells fast.
• Ask your REALTOR® to keep you advised of important issues as they occur so you can resolve them together quickly.
• Help organize all your buying and selling information. Dedicate a notebook to documenting the many dates and details of phone and face-to-face discussions, as well as important transactions.

Selling

• Put your home up for sale far in advance of purchasing a new one. You may want to consider selling first, especially in a buyer’s market. You’ll know exactly how much money you have for your new home. Plus, you’ll decrease the risk of temporarily owning two homes at the same time.
• Ensure you have ample time to find a new home (in the event that you sell first) by negotiating a long close or convenient rent-back option, where you can stay in the house as a rental tenant until you take possession of your new home.
• Be motivated to sell; list at a competitive price. If you suspect your home has problems that may hinder its sale, work with a home inspector to coordinate repairs or ensure your asking price reflects the home’s condition.
• Look at the big picture. You may want to consider a slightly lower offer if it is unconditional, or an offer that gives you more flexibility with respect to the closing date, as is often the case with first-time home buyers who don’t have to sell their existing house first.
• Speed up the selling process by giving preferential treatment to offers without financing conditions, or insist that buyers be pre-approved within five to 10 days of accepting their offer.
• Get the buyer of your old house and the seller of your new house to commit in writing to a specific window of dates and negotiate financial penalties to encourage both parties to stick to those dates.

Buying

• Before you list your home, do a little digging and see what’s up for sale in your price range. Little within your reach? You may want to hold off on selling until you buy. When you do, negotiate a long close to give you the necessary time to sell.
• Don’t waste your time looking at properties you can’t afford. Do the math and determine your budget. While you’re at it, select a lender and get pre-approved for a mortgage.
• Once you’ve found a property that seems perfect, have it professionally inspected and ensure you can get insurance before you make an offer.
• Give yourself enough time to review all the paperwork. From the get-go, tell your REALTOR® or lawyer you’ll need ample time to see and sign the closing documents.

Moving

• Only move what you need and love. Donate old and seldom-used clothes, housewares and furniture to charity. Regardless of the season, do some spring cleaning so you’re not packing what should really be tossed out.
• Organize your move by utilizing to-do lists and home-inventory lists (available from your REALTOR,® mover or the Internet). Make a master list of the items you pack and code all the boxes to ensure nothing gets lost and the movers can carry everything to the appropriate rooms in your new home.
• Give your utility providers, postal service, associations and other contacts plenty of notice of your pending move and arrange new start dates for services at your new home.
• Make sure you keep all your moving-related receipts. They could be tax deductible, depending on why you’re moving. Talk with a tax advisor to see if you’re eligible.
• To make moving into your new place as easy as possible, pack a separate bag for everyone in your family containing clothing, toiletries, medication, work/homework, bedding and other items they’ll need the first day. Also, put together a moving-in toolkit for assembling furniture, etc.

Trouble-shooting

Things don’t always work out the way we plan -- especially when buying and selling homes. Life can get stressful and costly when you buy a new home before you sell your existing one or sell before you find something you want to buy. The good news is there are options.

• In a situation where you need to carry two homes for a limited time, look into bridge financing. Backed by the equity in your old home, bridge financing is a loan to cover the down payment on your new home. It’s a great short-term solution, typically available for prime plus two percentage points.
• If you have good credit but your income isn’t high enough for you to qualify to carry a bridge loan plus two mortgage payments, consider a no-ratio mortgage, which doesn’t take into account your debt-to-income ratio. You’ll incur a higher interest rate but you can refinance later, once your situation is more stable.
• Alternatively, you could obtain extra funds by drawing on a line of credit on your old home. The interest rate is likely to be more than a point lower than on a bridge loan. The only downside is that you might have to pay a penalty fee if you sell the home within a year.
• Should you need interim housing, there are always short-term rental properties (some even come furnished) and affordable storage facilities. Or perhaps you can even stay for a short time with family or friends.
• Have children? Talk to school officials in both neighborhoods to work out the best schedule. For instance, if you’re not taking possession of your new home until the middle of a semester, with proper documentation, a new school may allow your children to start before you officially move in.