When buying or selling a home, things start to move pretty fast once the sales contract is signed. There’s a time element involved, and the closing date listed on the contract doesn’t leave a lot of leeway. You can accomplish simultaneous closing when you carefully plan and know how to buy a house before selling your current house. Maintain your peace of mind throughout the process when you follow these steps.
1. Decide if You Should Sell Your House Before Buying
If you can handle two mortgages at the same time, one on your current property and one for the next home, that’s the easiest way to buy a house before selling your current house. In a competitive housing market your current house will likely receive multiple offers, but remember you’ll be facing competition as well when you search for your new home.
However, most home buyers can’t afford two mortgages at the same time for two different properties. This complicates the question of how to buy a house before selling your current house.
2. Explore Ways to Avoid Paying Two Mortgages
Many borrowers also need the equity in their home to use as a down payment for the next one. In this instance, carrying two mortgages is not an option. Consider these alternatives:
- Make a contingent offer: When you make an offer on the next home, your agent will make a “contingent” offer, which means “I’ll buy your house contingent upon me selling the one I own now.” Your agent will let you know whether or not this is a viable option in your market.
- Take out a secondary loan: You can, however, take out a Homesite Direct “bridge” loan which is a temporary secondary loan placed upon the existing property for the amount needed for a down payment and closing costs.
- Use a bridge loan to pay cash: If you have enough equity in your current home, the new bridge loan might even be enough to make a cash offer on the next property. The bridge loan is paid off once your current property sells.
3. Work With an Experienced Agent
This is always good advice, but it’s especially important when you are deciding how to buy a house before selling your current house. Your agent can tell you from the very beginning whether or not a simultaneous close is feasible.
If it is, there will be a strict timeline you need to follow. If you don’t know of an experienced agent, Homesite Direct can connect you with one through our list of preferred agents in our Realtor Club.
4. Get Preapproved
To buy a house before selling your current house, you should go into this transaction with the confidence knowing your new mortgage is already lined up. All you need is to find a property. Getting preapproved is an absolute essential in a seller’s market where real estate doesn’t last very long on the market.
A strong preapproval letter can help sway the sellers into accepting your offer knowing your employment, income, assets and credit have reviewed and approved.
5. Prepare Your Home for Sale
Your real estate agent can give you a rundown of what’s selling in your area and provide guidance on updates to boost your home’s value. Make a plan to complete these steps before you put your home on the market:
- Hire a home inspector: Do you need to patch holes in a wall or fix a leaky roof? Get advice from a professional home inspector. It’s best to learn what any possible issues are and fix them before a buyer’s inspector can uncover them.
- DIY and declutter: Fix minor details on your own or hire experts to complete necessary repairs so you can eliminate red flags for buyers. Start decluttering and consider investing in cleaning services to ensure the space looks spotless and smells nice.
- Stage your home: Have an interior decorator create a warm, inviting atmosphere in your living spaces. Rooms that look picture-perfect will impress potential buyers and increase interest in your property.
- Price your home: Put some thought and research into the pricing of your home. Buyers will be more likely to take a closer look at your property if it fits in the price range they expect for the market.
6. Find the Home You Want
It’s important to find the home you want to buy before selling your current house. You don’t want to be rushed through a home search knowing you may have as little as 30 days to find a new property.
Your best bet here is to find an experienced agent who can narrow down the list of homes in the area where you want to live for the price you’re willing to pay.
7. Make Your Offer
Now you’re on the other side of a transaction. It’s here that you want to make an attractive offer to the sellers. In a competitive real estate market, this can mean making a full price offer.
With a strong offer and a preapproval letter in your hand, you’ve almost completed your simultaneous close and bought a house before selling your current house, or during the sale.
8. List Your Home
Now it’s time to list your current property. This is one of the most important steps to know how to buy a house before selling your current house. While you’ve been shopping for your new home, you’ve also prepared your current home for sale.
You’ve made all the necessary repairs and upgrades and even hired a property inspector to complete a full rundown on your current home’s condition. Your buyers will hire an inspector so it’s good to know in advance what issues, if any, need to be addressed.
9. Negotiate Terms
Sometimes buying a house before selling your current house doesn’t exactly work out. This is when it’s helpful to negotiate a lease-back with your buyers.
Even if the closing on your next home is delayed a week, you can ask your buyers if it’s okay to pay them market rent for the additional time you need to close on your next home.
10. Prepare a Backup Plan
Finally, if the stars don’t align exactly as you want them to and you have to move out of your current home before the next one closes, your Plan B should identify where you’ll live during the gap time between your two closings. This can mean a short-term rental and storage facility just in case you need it.
In competitive markets, it is possible to buy a house before selling your current house, but it does take some advance preparation. Work closely with your loan officer and your real estate agent and respond quickly when either reaches out. There’s a lot involved, but you’ve got some professionals behind you who will help guide the way.
Get Preapproved to Buy a Home
Thinking about moving or getting ready to buy a home? Homesite Mortgage, LLC provides a quick, simple way to get the financing you need. We offer flexible lending criteria with below-market interest rates. If you have questions or would like more information, contact our team to speak with a loan expert.
To get started, request a preapproval today!