How to Sell Your Home While Buying Another Home in Olympia, WA
If you already own a home and are looking to buy your next home, there are three ways to do this:
- List your home and buy your next home at the same time and align the close dates for both of those transactions.
- Sell your home first, move out and find temporary housing, and then buy your next home.
- Buy your next home first and then sell your current home.
Which is the right choice for you? Here are the pros and cons of each.
I. List and buy at the same time
This is a common approach for many sellers and buyers. You list your home and look for your next home at the same time. When you find your next home, your offer would be contingent upon you selling and closing on your current home. Here are the pros and cons of this option.
Finding your next home – Neutral
Depending upon the market, you may or may not have many choices when it comes to your home purchase. This can be stressful if you have listed your home and can’t find another home, or you found the perfect home, but the seller does not accept your offer because you have the contingency of needing to sell your home first.
I recommend spending more of your time getting your current home ready than going out house-hunting. Preparing your home for sale takes time and with this option, you’ll need to be in a position to sell your home quickly. In order to sell your home quickly, getting your home in show-ready condition will be a top priority along with pricing right and having a well-executed promotional strategy. As your home is getting closer to being listed, then start house-hunting.
Offer on your next home – Con
The offer on your next home most likely will have a contingency addendum that your purchase is contingent upon your current home selling and closing.
There are two types of home selling contingencies:
- Your offer is contingent upon your home being listed on the market and getting a buyer and then selling and closing. This is before you have an offer on your current home. This is also the weaker of the two contingencies.
- Your offer is contingent upon closing on your current home. This means you already have a buyer under contract to purchase your current home.
Many sellers do not like this additional contingency because not only are they waiting for you to close on their home, but they also have to make sure your buyer closes on your home. In other words, they have the burden of dealing with two buyers instead of one.
You may lose some negotiating power with a contingency. To make it worth the seller’s time to accept your contingent offer, you may not have the leverage to negotiate on the list price or other terms.
Financing – Pro
With the lender financing your home purchase based on the sale of your current home, this obviously frees up your debt of your current mortgage giving you more purchasing power.
Moving – Pro
By aligning the closing dates of your current home and your next home, this means you would only have to move once. This saves time, money, and a lot of hassle.
II. Sell your home first, move out and then buy your next home
By selling your current home first, you have the funds from your sale in your pocket and you can take the time you need to find your next home.
Finding your next home – Pro
By selling first, you now have the time to find your next home. This can be especially helpful if the market is low on inventory; you may need a lot of extra time to find the right home.
Offer on your next home – Pro
As you won’t have the added contingency of selling your home (you’ve already done that), your offer will be more appealing to a seller.
Financing – Pro
Like the first option, this gives you more purchasing power as the debt from the first home has been paid off and you hopefully have equity from your sale.
Moving – Con
This option would require you to move twice, which isn’t ideal for most. Plus, you’ll need to find temporary housing options and storage options for your household goods. This increases your moving costs.
III. Buy your next home first and then sell your current home
This is the easiest option logistically but can be a financial hardship as you are carrying two mortgages.
Finding your next home – Pro
By looking for your next home first, you can take your time to find the right home. You currently have a place to live with no pressure from a buyer on your current home nor the pressure of getting your current home sold and closed.
Offer on your next home – Pro
Without the added contingency of having to sell your home, your offer is more appealing to a seller.
Financing – Con
By carrying two mortgages – one on your current home and on your next home – this can diminish your purchasing power and you may qualify for less for your next home. This option has the added financial stress of having two mortgage payments each month if it takes extra time to get your current home sold.
Moving – Pro
This is the easiest option as far as moving. Not only will you have the time to pack up your household goods but you will have the time to prep your new house for your move-in. For example, if you wanted to install new flooring in your new home, you now have the time to do that before you move in.
Conclusion
Buying and selling a home take a lot of planning, prep work and good professionals on your side. Regardless which option you choose, make sure you discuss with your lender all of your lending options. Do you have to sell in order to buy? Or can you buy without selling? As your Realtor, I will help you with logistics, planning, options, and coordination of the transactions so you have a smooth move into your next home.
For more tips on buying and selling, be sure to check out my ultimate buyer and seller guides. And when you are thinking of buying and selling, call me and we can discuss your unique situation!
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