Buying & Selling Your Home Simultaneously
Introduction: What you need to know
When it comes to buying and selling your home simultaneously, there are both pros and cons to consider. Timing of buying and selling, logistics, financing, and equity of homes are common factors to be dealt with that can turn this dual process from a smooth ride to a hectic rollercoaster. Ultimately, deciding whether or not buying and selling your home simultaneously is the right choice for you will depend on your specific circumstances and goals, but it’s important to consider all the options to make it a seamless transition.
Should You Temporarily Rent?
One option to consider when simultaneously buying and selling is renting a temporary space to bridge the gap between selling your current home and buying a new one. This can help alleviate the stress of trying to coordinate closing dates and moving all in one fell swoop. Renting can also provide flexibility in case the closing on your new home is delayed or falls through, allowing you to avoid potentially losing your deposit or facing a gap in housing. While renting may add an extra expense, it can be worth it for the convenience and peace of mind it provides. However, renting can also come with its own set of challenges. For example, it can be difficult to find a rental property that meets your needs and fits within your budget. Additionally, you may be required to sign a lease for a set period of time, which can be problematic if you end up finding a new home sooner than expected. That being said, many people find that renting is a great option for them when buying and selling a home simultaneously.
Get a Bridge Loan?
One of the biggest challenges of this process is ensuring that you have the funds to purchase your new home before selling your current one. This is where a bridge loan comes in handy. A bridge loan is a short-term loan that is designed to bridge the gap between the sale of your current home and the purchase of your new one. This loan can provide you with the necessary funds to make a down payment on your new home while you wait for the sale of your old one to go through.
When considering a bridge loan, it is important to keep in mind that they typically come with higher interest rates and fees than traditional loans. However, they can be a useful tool for those who need the funds to purchase a new home before selling their old one. It is also important to have a solid plan in place for selling your current home, as the funds from the sale will be used to pay off the bridge loan.
Or a Lease-back?
Another option to consider is the lease back option, in which the seller can stay in the home for a predetermined period of time after the sale. This can provide the seller with more time to find their new home and move out without rushing, while also giving the buyer a guaranteed income during the leaseback period. It's important to negotiate the leaseback terms before finalizing the sale to ensure that both parties are satisfied with the arrangement. This option can be beneficial for both the buyer and seller, as it allows for a smoother hand-off and avoids the stress of trying to move out and move in on the same day.
There are a lot of moving parts when it comes to buying and selling a home, and timing is an essential component to get right. In order to minimize constraints, the seller should start looking for homes once their current property is under contract. This gives the seller enough time to find something new, while their buyers, in the case of a condo or co-op, are awaiting approval from the board and while their bank is underwriting the loan, if financing. Typically, you can anticipate to close anywhere from 30 - 90 days post contract signing in New York City depending on the property type.
When the selling and buying processes align, there is a massive decrease of potential issues that could arise. If there is tight inventory, then the seller has leverage over the closing date which could potentially give them more time to find a house to buy. It is very rare for a home purchase to be contingent on the sale of your home in New York City, so we always recommend listing first in order to have the proceeds from the sale readily available to put towards your next purchase.