The Trick to Buying & Selling at the Same Time
Need to buy and sell simultaneously? Here are your options.
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If you’re needing to sell your current home and buy a new one at the same time, there are a few routes you can go.
Your first option is to make your offer contingent on you selling your home. What does adding this contingency mean? Well, most offers in the market are contingent on something, and the most easily understandable example is financing; if you can’t get the financing needed to make the purchase, then you cancel the contract. Adding a sale contingency means that if you have a house to sell and you can’t sell it in a certain time frame, then you’re no longer obligated to purchase that new home for which you submitted an offer.
Now, from the seller’s point of view, this is a risky proposition; there’s little incentive for them to tie the fate of their home sale into someone else’s odds. Though some sellers might balk at a contingent offer, plenty accept them, and it’s still a viable strategy for many buyers. One way to make sellers more comfortable with your contingent offer is to lay out for them the detailed plan you have for getting your home sold. Let them in on your strategy; show them the comps you used to price the home, give an estimation on the time it will take to sell, and offer strong reasoning behind that estimation.
If you’re submitting a contingent offer in a multiple-offer scenario, you’re likely to lose that competition.
The second option you have is to buy noncontingent. Let’s say you have a pretty healthy savings account from which you can draw to make the down payment. In that case, your purchasing power isn’t dependent on the sale of your home. This approach forces you to front the risk yourself instead of the seller, but the advantage is that the offers you put in on homes will be stronger because sellers will know there are no strings attached to them.
If you’re submitting a contingent offer in a multiple-offer scenario, you’re likely to lose that competition. On the flip side, if you’re competing against contingent buyers and you’re noncontingent, you’ll have the upper hand. If you and every other buyer in the mix are noncontingent, then you’re all competing at roughly the same level.
For those worried about managing two mortgages, there’s some good news: The mortgage on the new home will be delayed. For example, if you close on a new home on May 31, you won’t be expected to start paying on it until July. This gives you time to list your current home and get it sold; if you sell it before July 1, you’ll avoid having two mortgage payments altogether. An experienced agent can show you more tricks to avoid double payments, a lot of which deal with the timing of your closing date.
As always, if you have any questions, please reach out by phone or email. I’d love to hear about your unique situation and help in any way I can.
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