Q: How Can You Pull Off Buying and Selling Simultaneously?
Buying a home before you list your current one is tricky, and here’s why.
Many of the sellers who reach out to me make it clear that they want to buy their next home at more or less the same time they navigate the selling process. After all, buying and selling simultaneously provides an added sense of security and a painless move.
However, as a listing agent who handles multiple offers, I know from experience that when we receive an offer that’s contingent on the would-be buyer selling their own house, it goes straight to the bottom of the pile. For example, let’s say there are six offers on a house with no meaningful difference between them in terms of price. If one of those offers is a contingent on a home sale though, it’s deemed instantly less attractive—that’s just the hard truth.
When you put forth a contingent offer, you double the number of moving parts that could potentially go wrong, which creates more risk and hassle for the seller. What are the alternatives?
Most people, especially families with kids, don’t want to have to move twice.
Well, you could pull the trigger on a new home first by paying cash or financing it through a bridge loan, which is basically a short-term sum of money lent by a bank to cover the interval between two transactions. Obviously, this route assumes that you either have the ability to qualify for such a loan, or a bucket of cash on standby.
You could sell first, move into temporary housing (perhaps a rental, or a friend’s place), and then start the buying process. However, most people, especially families with kids, don’t want to have to move twice.
That brings us back to where we started: contingent offers. The positive side of submitting a contingent offer is that, when you’re already in escrow and have your property sold, it makes it easier for you to be able to get an offer accepted on the house you want to purchase. So, yes, you’d be contingent on your home sale, but you’d also already have your home on the market; if the buyer of your property has already done a home inspection and appraisal, it’ll make your offer that much stronger.
The other plus side? Contingent offers give you security. You’ll never have to worry about being homeless because if you don’t win out on the house you want, you can back out of that contract you negotiated with the buyer of your property.
There’s also the option of doing a rent-back. Basically, we negotiate with the buyer of your property to allow a rent-back period wherein you’ll rent out your house (or, more precisely, their new house) and have ample time to get your purchase squared away. During this rent-back period, you’ll already have the proceeds from your sale in your account, and you’ll no longer be a contingent buyer. The downside, of course, is that, should you be unable to find a new home on the market, you’ll have to move into some sort of longer-term rental.
Lastly, you could try our program called Kimo Offers. Essentially, I can provide an offer for you to get it sold quickly; we can work out the terms to make it easy for you to be able to buy something else.
If that option is of interest to you, or if you have any questions about buying or selling in general, please give me a call or send an email. I’m always here to help, and I look forward to hearing from you.