The real estate process of buying and selling a home simultaneously can be very time consuming with very few guarantees. It is often assumed that because you put your home on the market it will sell immediately. Yes, in a seller’s market (like the current New Braunfels real estate market) at the right time of the year with proper preparation and excellent marketing, your home can sell very quickly. However, if everything doesn’t go exactly perfect, you will need some time to sell your home and that means buying another home at the same time is typically not feasible unless you’re one of the rare homeowners with the ability to pay two mortgages at the same time.
Since you will need to sell your current home in order to pay for a new one, you will need to prepare yourself for a certain level of uncertainty. Even if you are able to do everything right during this process, you may find yourself in a state of limbo for a short period of time. However, let me try to put you at ease a little… most people are able to sell their homes, purchase a new home, and move before ever needing to find temporary housing.
In fact, you might be surprised at how many times buying and selling a home happens simultaneously. Believe me, I’ve seen this happen many times over my career and with the right help on your side you too can make it through this process successfully.
All this really means is that you should expect to sell your current home before you purchase a new home. It may take some work and a little bit of faith, but you can do it. Many other homeowners have done exactly the same thing, and so can you!
Can I Sell Contingent on Finding another Home?
One path that many people try to take when buying and selling a home at the same time is to try to make selling their home contingent on finding another home. Frankly, this is a HUGE mistake! When you try to make selling your home contingent on finding another home, essentially your home is NOT really for sale. You are telling all potential buyers that at any point you could say “sorry I couldn’t find another home so you’re out of luck.” Very few buyers are going to be willing to take this risk, especially in a hot real estate market.
If you put yourself in the buyer’s shoes and you come across something that says “subject to finding suitable housing” in the sales contract, how could the buyer even begin to think about spending money on a home inspection, appraisal, attorney for contract review, etc. if in fact they might not actually be getting the house? Would you want to put your money at this kind of risk?
If you are selling a home, this is NOT the way to get top dollar for your home. Any good real estate agent will tell you that if you want to get the most money possible for your home, you need to put your home in front of the biggest buyer pool available. With a clause like this inserted into your listing agreement, you will be eliminating a huge portion of the buyer pool who won’t even consider such an arrangement. Putting this sort of contingency on the sale of your home is a great way to sabotage your ability to sell your property quickly and for the most money possible.
What About Buying On Contingency?
A long time ago in a galaxy far, far away it was acceptable to make an offer to purchase with a home sale contingency. In today’s New Braunfels real estate market, contingent offers are typically frowned upon. Essentially a home sale contingency allows a buyer to make their purchase subject to selling their home. This is not generally accepted because it leaves sellers helpless when buyers are unable to sell their homes.
Can you imagine putting all of the work into preparing your home for sale, marketing it to its fullest, and doing everything right to sell your home as quickly as possible and for maximum value and then accepting an offer from a buyer who has not done the same work to sell their home? You would be putting yourself at the mercy of your buyer doing everything that’s necessary to sell their house quickly. This might amaze you, but many people do not take the right steps to sell their home quickly.
In today’s market, there are many buyers competing for homes that have been positioned well and there’s no need for a seller to accept a deal contingent on someone else selling their home. You should not expect to find a home seller willing to make a contingency deal with you. Although it is possible, there is no need to go chasing this type of deal. It is better to just accept the reality of your current situation, and do what most other homeowners in your situation do… SELL YOUR CURRENT HOUSE, AND THEN BUY ANOTHER ONE AS QUICKLY AS POSSIBLE.
Mortgage Pre-Approval Letter (hoax?)
Recently, there has been a trend to try to outsmart the other guy when buying and selling real estate. A trick that I do not agree with is buyers trying to pull the wool over the eyes of sellers. Although I definitely recommend my buyers to get a mortgage pre-approval letter, some buyers have been submitting an offer with a pre-approval letter attached, but they have a home to sell in order to truly be able to qualify for the new home. They really are not pre-approved for another house.
As a REALTOR® it is my job to look out for the best interest of my client. One of the first things I will do upon receiving an offer is to find out more about the buyer’s current housing status. When getting an offer from a buyer who currently owns a home, I will always ask for the pre-approval letter to state that getting the mortgage is not subject to the buyer closing on their current property. If the lender cannot or will not produce this language in the letter, I will explain to my client that they would essentially be accepting a contingent offer. Again, most sellers will not accept a contingent offer and will be grateful that I have looked out for their best interest.
What are the Right Steps to Sell and Buy Simultaneously?
The following steps are what most people take when they currently own a home, but want to buy another one. Having a proper game plan in place will allow you to buy and sell a home at the same time.
Spend Some Time Searching
When you do sell your home, you want to be able to buy another home quickly. With this in mind, it is a wise idea to have spent some time searching for homes to really narrow down your search when you are ready to pull the trigger and make an offer. It is wise to narrow your search to specific areas you would like to live in and specific types of properties you would be comfortable in. This should all be done BEFORE listing your current house for sale. Spend some time with your REALTOR® discussing your wants and desires and get serious about finding where you are going to buy and what types of properties you are willing to make an offer on. It is time to begin scouting out the available inventory in the neighborhoods you like so that once your house goes under contract you can act quickly.
List Your Home for Sale
You’ve done the work to prepare your house for sale and you are confident it is priced right and marketed to its fullest. You’ve made all of the repairs and it looks fabulous! You know where you want to buy your next home and what type of home you will be comfortable in. Now is the time to take the plunge and list your home for sale with an exceptional REALTOR®.
Selling a home is a subject deserving of its own article, so I won’t go into many details here. However, I will say that you should find an agent you really trust and listen to what he or she says very closely as they will be an essential part of your home buying and selling experience.
When you do get an offer, you can try to push back the closing date as far as the buyer will allow, but remember the conversation above and don’t make the sale of your home contingent upon you buying another home. The average time from an offer to closing is typically 30-60 days, but the closing date is always subject to negotiation. If the buyer really wants your home, they will probably be as accommodating as possible.
Make an Offer on a Home
Once you’ve accepted an offer on your home, you can then make your own offer on the home that you want. What you need to do is structure the contract so the dates in your offer expose you to the least amount of risk possible. For example, you want to make sure that your inspection period ends after the inspection period on your home sale. This way if something happens to your buyer, you will have an out in your purchase contract that prevents you from losing your deposit.
As long as both contracts go through to the end, you should be able to sell your home and then buy the new home very close together. The majority of homeowners are able to manage to do this without even needing to find temporary housing and most of the time, the closing for both the buy and the sell will happen on the same day. Typically, the closing on the home you are selling will take place in the morning and closing on the home you are buying will occur in the afternoon.
What’s the Worst that Could Happen?
One of the worst things that can happen when trying to sell your home and buy another within a very short time span is getting your home sold and then not being able to find anything suitable to purchase. While this may be a slight inconvenience, it really isn’t the end of the world. In this event, you will end up needing to plan for a few extra things.
More than likely you will need to find temporary storage for your furniture and other large items within your house. You will also need to pack your home for a temporary move which may involve getting a storage unit and organizing it based on how urgently you may need access to certain items. While a double move is never pleasant, at least you will have your home sold. Renting a place in-between will allow you to search for your next dream home comfortably at your leisure. You can relax a little and avoid possibly purchasing something you will ultimately regret later.
Having said all of that, I want you to know that it is completely normal to feel a little nervous about trying to juggle so many things at once. You are dealing with huge financial transactions and we are also talking about the shelter and comfort for you and your family. Of course you want it to go well.
Fortunately, it typically does go well, but even if there is a gap between your home sale and the purchase of your new home, you can always rent temporary housing or stay with friends or family. This is a much preferred alternative to rushing into buying a house that you will regret in the end. It may not be ideal, but it will probably be something you look back on years from now and laugh about while you’re sitting comfortably in a home you love.
About the Author:
Hi there! I’m David Carpenter, a REALTOR in New Braunfels, TX and an associate with NPL Group. Real Estate is my passion! I believe consumers deserve a better experience when buying and selling real estate and I strive to make your experience better than you will get anywhere else. I truly enjoy writing useful articles for home buyers and sellers to help simplify the real estate process and provide a visual guide through one of the most complex times of your life. Feel free to contact me directly or leave a comment in the comment section below.