Updated: Jun 17
Buying or selling a property can be stressful in and of itself. But when you need to do both at the same time, that can compound the stress even more. Each process involves a lot of moving parts, but doing them at the same time adds the additional pressure of making sure the timelines of each part match up perfectly.
On top of this, you may be hearing a lot of news about the Seller's Market we're in right now, meaning that there are less homes available than there are interested buyers. Competition in Buying adds a whole new layer of complexity that may make you re-think Selling now, even when it's otherwise the right time for you to move on. The good thing is you're not alone - it's very common for people to Buy and Sell at the same time, and with guidance and advocacy from the right Real Estate Agent, there are plenty of options to make the process smoother. The following are a few options that can ease stress and give you more confidence and power as both a Buyer and Seller. Not all options apply to all situations, so get in touch with us to talk about your unique situation, and be sure to discuss these options with your mortgage broker and real estate attorney as well.
1. Hire a Real Estate Agent
First things first: you need to have a professional Real Estate Agent in your corner. A strong Agent is an invaluable guide through this process. They will assess your unique home and your specific goals and desires within the context of your local market. They will be able to give you a personalized step-by-step plan that will put you in the best position to sell and buy at the same time. 2. Protect Yourself with a Home Purchase Contingency It is not uncommon for a home buyer to put a “Home Sale Contingency Clause” in their Offer. This provision allows the Buyer to back out of the agreement and receive their deposit back if they are not able to sell their current home by a specified date. It’s also possible for a Seller to use a similar clause. Your Agent may be able to negotiate with the Buyer to have protection built into your agreement that will allow you to back out of the deal if you aren’t able to sell your home by a specific date. 3. Have your Financing Lined Up Before you buy, have all of your finances and documentation gathered and ready. This way you'll be ready to jump as soon as your dream home hits the market. If you are buying in cash, make sure it's available and that you have a Proof of Funds letter from your bank. If you are using a loan, your Agent will connect you with a trusted Lender. Get a pre-approval from them. Make sure you have liquid funds available for a down payment plus closing costs. Be working to improve your credit score. Don’t take on any new debt or make any major purchases. All of these are basic essentials to ensuring a smooth home purchase and sale process.
4. Leverage Your Home Equity “Cash is King” in Real Estate, and the more cash you have on hand, the more competitive your offer will be! If you’re Buying and Selling at the same time, you can leverage the asset you already have to free up more cash for a new purchase. Here are a few options:
HOME EQUITY LOAN
A Home Equity Loan is an option to give you more liquid funds and therefore maximize your purchasing power.
Home Equity is your home’s market value, minus what you owe on your mortgage. Equity grows in two ways; first, as you make your monthly payments on your loan; second, as your home’s market value goes up. If you’ve owned your home for several years you may have more equity to tap into than you realize. A Home Equity Loans allow you to borrow a portion of your equity in a lump sum (often up to 85%) at a relatively low interest rate over a period of up to 30 years - depending on the lender and your financial picture.
If you plan to take out a mortgage on the new home in addition to the Home Equity Loan, be sure to check in with your lender - some lenders may not approve this as a source of a down payment. There are additional benefits and risks to this type of loan beyond the scope of this article. Be sure to speak with your lender and do thorough research before taking out a Home Equity Loan. BRIDGE LOAN In Real Estate, a Bridge Loan (a.k.a. "Interim Financing" or "Gap Financing") offers a short-term loan to cover some of the costs of a new home until the Borrower sells their current home. This type of loan can give you the peace of mind to be able to purchase a new home without the worry of selling before your closing date. Bridge loans are typically available to borrowers with high credit and low debt-to-income ratios. They often come with a high interest rate; typically higher than a Home Equity Loan. Speak with your lender about the pros and cons of their specific terms, and as with any financial decision, make sure to understand the risks before committing. 5. Sell Your Home - but then Rent it Back This option may give you a sigh of relief as someone Buying and Selling at the same time. You can sell your home, and as part of the Offer negotiation you can request a short-term Agreement between you and the Buyer to allow you to remain in the home after closing for an agreed-upon time at an agreed-upon rate. There are a few variations of this agreement, known as a “Use and Occupancy Agreement” (U&O) or a “Rent-Back Agreement” (aka “Sale-Leaseback” or “Post-Settlement Occupancy Agreement”). There are pros and cons to this for both the Buyer and Seller. You will want to discuss this further with a Real Estate Attorney, which you can get connected with through your Agent.
6. Consider Renting In Between
Moving can be a hassle, we know. And as Real Estate Agents we strive to make the process as hassle-free as possible. However, renting is an option worth considering if you want to both Sell and Buy at the same time. It allows you to Sell your home without stressing about a timeline, collect the proceeds from your sale, and then have freedom and flexibility to Buy whenever you find the right place. Your Agent may be able to help you find an apartment or home with short-term or flexible leases. To reduce the labor of an additional move, look for a fully furnished rental and use a moving company to store your non-essentials until you find a more permanent place to call home.
7. Make sure your Agent is tapping into Off-Market Listings The stakes are high when you are selling and buying at the same time, and in the Seller’s Market that we’re in right now, you need to be one step ahead of the purchasing competition. Before hiring your Agent, be sure to ask what methods they have to tap into off-market listings. Using an Agent from Coldwell Banker can maximize your chances of finding a great pre-market or off-market home. We have a unique “Exclusive Look” program that provides a platform for agents to promote listings within our private network before the hit the public market. With the largest market share in New England and over 4,000 agents, your CB agent’s expansive network will exponentially increase your chances of finding a great place to land before your competition.
We hope you've discovered some options that will help allay your fears of Buying a home in this market. With the right agent in your corner, you will have the confidence and capability to take on the market fearlessly. When you're ready to discuss options, give us a call at 617-553-9505.