Every real estate transaction is different and unique in its own way. Some real estate transactions are straight forward while others have several hurdles that need to be overcome.
It’s important if you’re planning to sell and buy a home at the same time, you understand what options you have and also understand the potential scenarios that can result. If you happen to be selling a home for the first time, it’s even more important to be comfortable with the potential scenarios that you may encounter.
Read on to find a complete guide on how to sell and buy a home at the same time. Below you will find information on what the difference is between non-contingent and contingent. There are also many PROs and CONs to both buying a home first prior to selling a home and vice versa.
What Is The Difference Between Non-Contingent & Contingent?
If you’re in the market to sell and buy a home at the same time, contingent is a term that you should become familiar with. Contingent can easily be defined as a something occurring only if other circumstances are fulfilled. In real estate there are many common contract contingencies that can exist. If you’re going to sell and buy a home at the same time the one to become familiar with is the sale and transfer of title contingency.
Understanding the difference between a non-contingent buyer and contingent buyer is very important. A non-contingent buyer is someone who is able to purchase a home without needing to sell a property in order to do so. A non-contingent buyer is the type of buyer that you want to attract when selling your home. When buying a home, it’s also the type of buyer you’d prefer to be, especially if you’re buying a home in a sellers market.
A contingent buyer is someone who is able to purchase a home, however, needs to sell a property in order to do so. If you’re selling a home, receiving a purchase offer contingent on the sale of another property is certainly better than receiving no offer, however, its fairly common that a purchase offer that is contingent on selling another property does not end up closing.
What Are The PROs Of Buying A Home Prior To Selling Your Home?
The time it takes to buy a home cannot be predicted. Some buyers will find the perfect home on the first day they look at homes and others may take months. One benefit to buying a home prior to selling your home is that you know you’ve found a home that you want to buy. If you know that what you’re looking for in a home is not common or easily found, buying a home prior to selling your home could be a good option for you.
Another benefit of buying a home prior to selling your existing home is that you’re able to perform any inspections on your new home. There are many reasons why having a home inspection is a great idea when buying a home. Buying a home prior to selling your home gives you the opportunity to walkaway from a home if the inspection results are poor without having to feel pressured into buying a home you’re not comfortable with because your existing home is sold and you need a place to live.
What Are The CONs Of Buying A Home Prior To Selling Your Home?
Buying a home prior to selling your home can be devastating as well. You may be asking yourself how buying a home prior to selling your home can be devastating.
If you need to sell your existing home in order to buy a new home, submitting an offer contingent on the sale of your home can often lead to your accepted offer getting “bumped.”
Getting “bumped” in real estate simply means that a seller receives an offer that is “better” from a different buyer and requests that the contingent buyer either removes their contingency of needing to sell their home (and provide proof that they are able too either by providing a bank statement or pre-approval indicating they have the immediate funds available) or their offer will be null and void. This is the reason buying a home prior to selling your home can be devastating, because losing a home that you fall in love with can be extremely difficult.
Another potential drawback to buying a home prior to selling your existing home is that some sellers will not entertain contingent offers. This is extremely common to homeowners who are relocating and are using a relocation company. Most relocation companies will not entertain offers that are sale contingent. This can limit the number of potential homes that you’re able to purchase due to your home sale contingency.
Buying a home prior to selling your existing home does give you the extra time to perform inspections and can be a benefit to buying before selling, however, it’s possible you’re wasting valuable dollars on these inspections. Spending your hard earned money on the inspections of a home that you may get “bumped” on is an obvious negative to buying a home before selling your existing home.
What Are The PROs Of Selling Your Home Prior To Buying A Home?
Most people who have bought and sold homes in the past will tell you that selling a home is more difficult than buying a home. A huge benefit to selling your home prior to buying a home is that you know you’ve secured a ready, willing, and able buyer. This is extremely beneficial when looking for your new home as you will no longer be sale contingent, just contingent on the transfer of title on your existing home. A buyer who is not sale contingent is a much more appealing buyer for sellers.
What Are The CONs Of Selling Your Home Prior To Buying A Home?
If you’re going to sell and buy a home at the same time, it’s critical you hire a top real estate agent who has experience with helping people sell and buy homes at the same time! The primary reason for making sure you have a top real estate agent and also the biggest drawback of selling your home prior to buying a home is the possibility of having to rush to find a new home.
A top real estate agent can help negotiate not only a longer closing on your existing home but also attempt to negotiate a rent back period of your home. If your real estate agent is able to negotiate a rent back, this can allow additional time for you to remain in your home which can allow you the time to find a new home.
Tips To Prepare To Sell And Buy A Home At The Same Time
Before selling your home, it’s extremely important to make sure your home is market ready. There are certain things you should know prior to listing your home for sale!
One of the best ways to get your home market ready is to get advice from a local real estate professional. A real estate agent who is an expert in your local area will know what you should do prior to your home being listed for sale. They should be able to give advice on what repairs, upgrades, and updates that you should consider doing prior to listing your home for sale.
How can you ensure you hire a real estate agent who is an expert in your local area?
There are specific questions to ask real estate agents while interviewing. A seller who knows how to properly interview prospective real estate agents greatly increases the chances they hire a rock star and not a DUD for a real estate agent.
Also Read: How To Qualify As A First-Time Home Buyer
Get Your Finances In Order
A homeowner who is going to sell and buy a home at the same time needs to have their finances in order. The most important thing to find out prior to selling and buying a home simultaneously is whether you can qualify for a mortgage without having to sell your existing home. The majority of people are unable to do so but if you’re able, this can be a huge advantage.
When getting a pre-approval for a mortgage, ask the mortgage consultant you’re working with whether buying non-contingent is an option or not. If buying a home non-contingent is an option, but you feel more comfortable buying contingent, consider having the mortgage consultant still issue a non-contingent pre-approval.
This non-contingent pre-approval may be useful in the event you get “bumped” while purchasing a home sale contingent, should you decide you want to purchase the home and remove the sale contingency on your existing home.
Even if you’re unable to purchase a home non-contingent, it’s still extremely important to get pre-approved for a mortgage. Since a mortgage pre-approval can take a handful of days to complete, having this completed prior to looking for a new home or listing your home for sale is important.
Also Read: How To Negotiate Low Mortgage Rates
Know Your Game Plan
One of the biggest mistakes that homeowners make who are attempting to sell and buy a home at the same time make is they don’t have a game plan in place.
Below are several questions that you should answer prior to beginning the tricky process of selling and buying a home simultaneously.
- Will I list my home prior to looking at homes that are for sale?
- Will I make any offer received on my home contingent on finding a suitable property for myself?
- Will I find a new home prior to listing my home for sale?
- If needed, do I have a place to move should my home sell fast and I haven’t found a new home yet?
- If needed, can I afford to put my belongings in storage for a short period of time?
- Can I afford to purchase a home that would make it worth selling my existing home?
To sell and buy a home at the same time it’s important to understand exactly what to expect throughout the process. It’s also vital to have a game plan in place and to stick to it!
If you think buying a home prior to selling your existing home is the best for your situation, then stick to it! If you think selling your home prior to buying a new home is the best for your situation, then stick to it!
In most situations, I strongly recommend that you sell your existing home prior to buying a new home. It generally will make the process less complicated and also can be significantly less stressful and devastating.