Four Need to Knows about Buying & Selling Simultaneously

Buying a house was once a process that only took a couple of months. But today tight mortgage guidlines, market concerns, and distressed sales appraisal dramas extend this process all while making it much more complicated.

If you're trying to buy and sell at the same time, it seems like you've undertaken all these complications twofold. However, getting educated about today's market and figuring out all your options gives you strategy. There is no need to panic and worry about all the outcomes. here are four tips that will make buying and selling your house much easier.

1. Meet with your agent way before you plan to list your house.

           This allows them to give you an idea on how long it will take to sell your house, and possibly how you can move it along faster. They'll give you advice when and at what price to list your house, and show you how it can realistically be expected to quicken the sale of the house. They can and will tell you what price you will most likely receive on your house. This opens up the option whether you need a short sale (if your houses' value is less than what you owe) or not. This will affect your qualifications on your loan application in the short-term. Short sales make it very difficult to get a loan for a few years, but if you want to and need to buy in the near-term with a short sale, discussing legalities and logistics must be done with your CPA, mortgage pro, or attorney. Meeting with your agent a year before you plan on moving isn't too early at all. All the information you need will come from meeting with them this early.

2. Meet with your mortgage broker before you start looking for houses or put yours on the market.

            Obviously this step would have been done anyway, but it is critical they walk you through this process before any major contracts are signed. Talking with them will help you:

calculate the math on what you'll retain on your sale, help you know what much you can qualify to buy, what you will need to come up with for the purchase, understand whether the sale will impact your credit at all and if so by how much, and the time of the sale.

There are numerous ways of figuring all this out, but talking with your mortgage pro will let you all order them before the process actually gets going. So meet with them ASAP.

3. Know your options for staying in after closing, or moving in early.

                Most people in this situation try to simultaneously buy and sell so they aren't wasting any money. But the truth is that in today's market, very few of these sales close on the expected date. The bank takes longer than expected to approve the appraisal of the house while the seller's bank takes forever to allow the short sale. If you are trying to sell your house before your purchase is complete, you have every right to ask for a 'rent-back' which means you can stay on the property for as long as a month. Doing this though is costly, because you will ahve to pay the buyer rent in any way that it is negotiated.

Let's say you are buying after you have sold, some sellers will let you move in before finalizing a similar arrangement. They could even ask you to sign a document waiving their liabilities on your personal items.

4. Plan for gaps and overlaps.

                You can almost always plan on your escrow closing late. But make sure you have a backup plan for when either deal gets finalized late. It's always good to be prepared for these gaps and overlaps, so plan ahead and be prepared for them. So if you are buying before you are selling, collect yourself a cash cushion for the couple month payments you'll be forced to pay. If this option just won't work, try renting a place for a couple months while you try and find a house.  You might even want to consider renting a hotel suite or a short-term vacation rental.

Good Luck!

Discussion

#1 Posted by timeshare resale at 9/15/2011 2:26 PM
Its a tough time buying and selling at the same time. I had a bear of a time doing it and barely made it out....this was with bad credit and a foreclosure property....ouch.
#2 Posted by benjamin at 1/3/2012 1:02 PM
In this economy I am noticing that people follow the best deals! Even to the extent of converting their home to a rental. I am currently looking into a Cape Cod vacation rental but as soon as it makes more sense to do it, I will probably end up selling it. And when I do, I will definitely follow these steps. Thanks a lot for the help and info!

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