How to Buy and Sell a House at the Same Time?

Buying a house is stressful. One survey found 37% of homeowners believe buying a house was one of the most stressful events in their lives, beating out other stressful events like looking for a job, planning a wedding, and having a child. Some people embark on the home-buying process while trying to sell their current homes – creating a double stressful event of trying to buy and sell a house at the same time. 

The timing is even more delicate when you are handling two home transactions. Don’t worry, we can help you through this. Use this guide to know how to sell and buy a house at the same time, from coordinating the timing to dealing with overlapping mortgages.

Evaluating the Real Estate Market

Before you decide to sell your home, evaluate the current real estate market to understand what you are up against. This is particularly important because you will have to handle both markets at once – which means you could benefit from one market but struggle with another. Here’s what you need to know. 

• Buyer’s market: there are more houses available than buyers who want them. A buyer can make offers that are lower than the listing price because the seller is eager to move the property. 
• Seller’s market: there are more buyers who want houses than sellers marketing their homes. In this case, a single house for sale might get multiple offers – with some buyers entering bidding wars and making offers above the listing price. 

As of Summer 2023, housing market inventory is low, creating a national seller’s market. This means you might receive multiple offers for your house when you list it (which is good) but struggle to get your offer noticed on your next home (which is bad). 

Keep in mind that local trends outweigh national ones. Just because there is a national competitive market doesn’t mean your area is going through the same thing. Evaluate the market where you are selling and buying (if different) to make sure now is the right time to make this move. You can also talk to a local real estate agent to get their insight on regional market trends.

Pros and Cons of Buying First or Selling First

As you plan your move, you need to decide whether you are going to buy or sell first. (You can also try buying and selling at the same time, but know that this timing doesn’t always align perfectly.) Here are some of the benefits and drawbacks of each option. 

Buying First: Benefits and Drawbacks

Buying a house first can give you stability about your future, but might not be the best financial decision. Here’s what you need to know. 

Pros

• You can take your time on your home search. There’s no deadline to move out of your current home so you can find a property that meets all of your needs. 
• You know where you will live in the future. You can secure a home that you love and don’t have to stress about househunting. 
• There’s time to renovate. You can remodel your new house if you need to before you move in. 
• There’s no need to secure storage. You can move your belongings from one house to the next. 

Cons

• You need a cash down payment. Many people sell their homes and use the proceeds as a down payment on their next home. 
• You might have two mortgage payments. This could be more expensive than you want if it takes longer than you expect to sell your current home.  
• You still cover the utilities for both properties. You are still responsible for the water, electricity, sewage, taxes, insurance, and other costs related to your old home while moving into your new one.
• You have to stay close to your old home. Selling a house takes time and you need to be present. You might not be able to completely move away just yet.  

The finances alone usually push homeowners to sell before buying. They don’t want to take on two mortgages and don’t have enough money saved for another down payment. However, if you can handle the monetary requirements, this might be a good choice.

Selling First: Pros and Cons

Selling an existing home is often the most practical; however, it can also be stressful. Here are some pros and cons of this option. 

Pros

• You gain access to your net proceeds. You can have a larger down payment from the proceeds of the sale of your home. This makes your offers more appealing, streamlines the mortgage process, and lowers your interest rates.  
• You don’t have to worry about your home after it sells. You can focus completely on buying a property once a buyer closes on your old home. 
• It is easier to move from one state to the next. You can wrap up your ties to one area and move to a new place. Selling first is ideal if you need to move for work and can’t travel back and forth from one house to the next. 

Cons

• You need storage and temporary housing. Unless you sell your house and close on another on the same day, you will need a place to live when you are between homes. You will also need storage for your items. 
• You might not know where you are going to live. Your temporary housing could last for a few days or several weeks until you close on your next house. 

Oftentimes, people will close on their old home and move into their next a week or two later. Just because your home hasn’t reached the closing date yet doesn’t mean you can’t make offers on other homes and estimate your down payment based on your current situation.

Financing the Transition

If you are still on the fence about whether you want to buy or sell your home first, look at your finances. Here are a few loans and credit options to consider when buying a house before you sell your current one. 

• Bridge loan: this loan is meant to provide money during a transitionary period – like moving from one house to the next. The bridge loan will last between six to 12 months and is based on the value of the borrower’s old home equity. Bridge loans could be a good option for cash buyers. 
• Home equity line of credit: often shortened to HELOC, the home equity line of credit is based on how much you own of your house. If your home is worth $500,000 and you have a $200,000 mortgage, then your equity is $300,000. The home equity line borrows from this estimated worth and can be used to put a down payment on your next house. 
• Traditional mortgages: talk to your mortgage lender and see if you have the ability to apply for a second mortgage. They will look at your finances to see if you can handle two mortgage payments. You will need to request a low down payment mortgage because you won’t have the funds from selling your house yet.  

A low down payment mortgage might have a higher interest rate because the lender is taking a greater risk in funding a greater portion of your house. You might also need to pay private mortgage insurance until you own at least 20% of your home.

Conversely, if you decide to sell first, you will only need to set up a temporary housing budget. You can use your net proceeds as a down payment and will only need to deal with one loan application for your mortgage. 

Working with Real Estate Agents

If you are easily overwhelmed by financial terms like bridge loans and HELOCs, hire a real estate agent who can walk you through your options. A good real estate agent has worked with dozens of clients who are buying and selling at the same time. They know how stressful this process can be and how to streamline it. 

Talk to a Realtor about your plans and the various options available to you. Here are a few recommendations they might bring up depending on the market and your moving goals. 

• Home sale contingencies: when you make an offer on the home, you can add a contingency that you cannot close until your current home sells. This might dissuade some sellers from accepting your bid, but it will allow you to make offers on homes while you currently sell your existing property. 
• Rent-back agreements: in this case, the buyer closes on your house but you continue living there as a renter. This allows you to gain access to your equity to provide a down payment while giving you time to buy another house. These agreements can last anywhere from 30 days to six months. Some buyers who are eager to move in might not want to enter into rent-back agreements. 

Additionally, your Realtor should have a clear picture of your moving timeline so they can set reasonable closing dates. If you haven’t started looking for a new home but have already listed your current one, they might push back your closing date by 30 days (as long as that works for the buyer) to give you more time. This can help you save on temporary housing costs. 

An experienced Realtor is an alley in helping you combine the buying and selling process. They should come up with solutions to help you reduce stress based on what their past clients did. 

Coordinating the Timing

The biggest problem with buying and selling at the same time is that there are multiple parties involved. You need to create a fair timeline that works for you, your buyers, and the sellers of your next home. These latter parties are also likely working with buyers and sellers of their own (or landlords if they are leaving or entering rental agreements). It’s unlikely that all parties will be flexible when it comes to setting deadlines. 

This is why the closing date is negotiable and can be a tool for buyers who are making offers. Your Realtor can let buyers know that the seller wants bids from people who will be flexible. Otherwise, if the house sells before the owner has a place to go, they will need a temporary place to stay.   

 Of course, you also can’t drag out your closing date if you are selling your home first. You will need to provide your new home’s down payment and other documentation to your lender. This means you can’t wait forever for your buyer to close. 

Communication is a big part of house hunting. Home buyers share their ideal timelines with sellers and both parties see if these dates align. In a competitive housing market, good timing can make one offer stand out above multiple similar bids. 

Overlapping Mortgages: Management and Risks

If you are thinking about making a home purchase before selling your existing home, make sure you can handle all of the financial aspects of this decision. You can talk to your mortgage company (if you plan to work with the same agent), personal finance professional, or an experienced real estate agent to learn about your options. Just because you think you can handle two mortgages doesn’t mean this is a viable option. Here are a few things to consider. 

• The application process: your lender will look at your debt-to-income ratio to consider whether you can handle a second mortgage. This alone could prevent you from qualifying for a new mortgage. 
• Utilities, insurance, and taxes: not only will you have to pay your mortgages simultaneously, but you will also have to cover the maintenance costs of both homes. Even paying the home insurance rates and water bills for two homes for a short period can put pressure on your savings. 
• Moving expenses: some people pull some of the net proceeds from their home to cover moving costs. Make sure you have enough in the bank to handle a move. 

It’s much easier to buy a new house if you can make a cash offer. You won’t have to worry about long-term mortgage rates and other loan processes. Consider how much equity you have in your home and whether it can fully cover the cost of your next house. A home equity loan might be the best option if you want to buy before you sell.

Tips for Success

Don’t get overwhelmed by the process of selling a house and buying a new one. Here are a few tips to buy and sell at once. 

1. Gather information when house hunting. Don’t just look at the home features, ask about the sellers and their timelines (and motivation) to sell. 
2. Have a clear picture of your finances. Keep digital copies of relevant financial documents on-hand. You can quickly send these to lenders, whether you need a home equity loan or a traditional mortgage.  
3. Develop a nest egg. Evaluate your cash reserves so you can cover moving costs, housing, and other expenses if you are in-between homes.  
4. Don’t rush the home purchase process. It’s easy to panic if you are approaching your closing date. However, your home is out there, shop at your own pace. Don’t settle for a house you dislike in an area you aren’t happy in. Otherwise, you will just want to move again in a year or two.  
5. You don’t have to agree to every request. Real estate involves countless negotiations. Know that every request from a buyer or seller could be accepted, rejected, or countered with a fair compromise. Don’t feel the need to please everyone while making your situation less comfortable. 

Finally, it’s okay to ask questions about real estate. You don’t have to know everything – that’s what your Realtor is for.

Buying and Selling At the Same Time is Possible

Don’t stress if you are buying and selling all at once. You can look into a new purchase while still juggling offers from potential buyers. Instead of dealing with two mortgages, consider your loan options or set strategic closing dates.

Work with a Realtor who can help with the home sale and home purchase at the same time. You can move all your belongings out of your old house and into your new one with minimal stress. 

In a perfect world, the dates and finances line up in a manner that works for everyone involved. However, the reality is that you will face multiple negotiations and challenges in the home sale.

Refer to this guide whenever you need help on how to buy and sell a house at the same time so you can overcome any hurdles that come your way.

In the meantime, find a trusted real estate agent at FastExpert who can get on board with your plans and help you reach your goals.