Buying and selling a home at the same time is difficult in a seller's market. It's difficult because closing both homes is putting some seller at risk. Quite often the person at risk is the seller of your new home.
Buying in a Seller's Market
So you want to sell your home and buy a new one at the same time. Well, take a moment to put yourself in a buyer's shoes. Home buying in a seller's market has its own obstacles. Just imagine what happens in a seller's market.
1. Inventory Is Low: There are fewer homes for sale in a seller's market than you would see in a balanced market. There is more buyer demand than the supply of homes. You may not find a home that is to your liking.
2. Multiple Offers
: In a seller's market, buyers are duking it out with other buyers who want to buy the same home. The seller could be swamped with offers to choose from. A buyer who needs to sell a home first is not very desirable when going up against a buyer who has no home to sell.
3. Home-Sale Contingent Offers: Some home sellers are limited to using a home sale contingency. Your offer to buy the home of your dreams is still a contingent offer even if your home is in escrow, waiting to close. Why? Because that seller needs the money from the closing to buy their new home. If it doesn't close, they can't perform on the contract and may lose the home.
Buying and Selling at the Same Time in a Seller's Market
1. Buying a Home First: If you can afford to own both homes at the same time, and a lender will qualify you, you might want to go ahead and find the home that you want to buy first. You may need six months of mortgage payments for both homes and funds necessary for downpayment and closing cost in the bank to qualify for financing. This is the ideal option and you will feel relieved if you can afford to do it this way.
2. Renting Back After Selling Your Home: In a seller's market, it is more common for you, the seller, to ask a buyer to let you rent back your home for 30 to 60 days after closing. This can give you time to locate another home.
3. Selling First and Buying Second: This option is probably the least stressful because it has the least amount of risk. The pro is that you will already have your sale proceeds and the con is you have to move out of the home at closing. Some people put all of their belongings in storage while they stay at a hotel or move back home for a while. Alternately, some people will lease a new place on a month-to-month lease. That month to month lease gives them flexibility.
Buying and selling a home at the same time is difficult in a seller's market. It's difficult because closing both homes is putting some seller at risk. Quite often the person at risk is the seller of your new home. Your agent can help you navigate the treacherous terrain.
Christian Robinson | Spokane Realtor
Haven Real Estate Group