Buying a new home while selling your current one can feel like a high-stakes juggling act. If done right, you can transition seamlessly from one home to the next without feeling the financial strain of carrying two mortgages or being stuck without a place to live. Here’s how to navigate the process smoothly.
1. Understand Your Market
Before making any moves, get a solid understanding of the real estate market in both the area you’re selling in and the area you’re buying in. If you’re in a seller’s market, your home is likely to sell quickly, but finding a new home might be more competitive. In a buyer’s market, you may have an easier time purchasing a home but might need extra time to sell your current one.
2. Get Pre-Approved for Your Next Home
Securing mortgage pre-approval is crucial when buying and selling simultaneously. This helps you understand your budget and strengthens your offer when you find the right home. If possible, consult a lender about bridge loans or home equity lines of credit (HELOCs) to help finance the transition.
3. Choose the Right Selling and Buying Strategy
Depending on your financial situation and market conditions, you have a few options:
Sell First, Then Buy: This is the safer financial choice since you won’t be stuck with two mortgages. However, you may need temporary housing if you can’t find a new home quickly.
Buy First, Then Sell: This option ensures you have a new place to move into, but it requires confidence in your ability to sell your current home quickly or the financial means to carry both mortgages for a period.
Simultaneous Closing: With careful planning, you can close on both transactions on the same day. While challenging, this method minimizes the gap between selling and buying.
4. My Experiences Buying and Selling at the Same Time
Having personally gone through this process three times, I can say that each experience came with unique challenges and lessons learned.
First Move: Starter Home to Family Home
The first time I bought and sold at the same time, I was moving from a starter home to a larger family home. My starter home sold before it was even listed, and the house I purchased was a new build spec home, allowing for flexible closing dates. This smooth process gave me plenty of time to move out and clean my old home before moving into the new one, making for a relatively stress-free transition.
Second Move: Family Home to Custom Build
The second time, I moved from our family home into a custom-built home. This involved working closely with a builder, which was exciting but required patience. Unfortunately, we faced a lag in mortgage financing, which meant we had to rent a temporary home until our custom home was ready. While the process was challenging, having a contingency plan helped us navigate this period without too much disruption.
Third Move: Custom Home to Downsizing
The third and most difficult move was downsizing from our custom-built home to a smaller home in an established neighbourhood due to a family change. Selling our custom-built home took much longer than expected, and once it finally sold, I struggled to find a new home in a competitive market. Eventually, I secured a home but had to move in with my parents for three weeks while waiting for possession day. During that time, all my belongings were in storage. This experience reinforced the importance of flexibility and having a strong support system during transitions.
5. Be Prepared for Conditions
Many buyers and sellers use contract conditions to align their transactions:
Home Sale Condition: This makes your purchase conditional on selling your existing home.
Tenancy at Will Agreement: If you sell first, this allows you to rent your old home for a short period while finding a new one.
Extended Closing Period: You can request a longer closing timeline on your purchase to give yourself more time to sell.
Seller's New Home Condition: This allows the seller to make the sale of their home conditional on securing a new home, ensuring they don’t end up without a place to live.
6. Plan for Temporary Housing (Just in Case)
Even with the best-laid plans, timing doesn’t always work out perfectly. Be prepared with a backup plan, such as short-term rentals, staying with family, or securing a storage unit if needed.
7. Stay Flexible and Communicate
Real estate transactions involve many moving parts. Maintaining open communication with your agent, lender, and other parties involved will help you navigate any unexpected challenges. Flexibility is key when juggling both buying and selling simultaneously.
Final Thoughts
Buying and selling a home at the same time requires strategic planning, financial preparedness, and a skilled real estate team. By understanding your market, securing financing, and working with the right professionals, you can make the transition smoother and stress-free. If you’re thinking about making a move, start by consulting with a trusted real estate expert to develop a personalized strategy for your situation.
