Navigating Buying and Selling a Home Simultaneously

[Jeet Sangha]

Some of you might be facing the predicament of buying and selling a home at the same time. This can be challenging especially if you need the funds from selling your current home to buy the next one. If this process is not handled carefully you run the risk of losing out on the home you want to buy, getting a lower offer on your current home or worse having to move out without securing your next residence. In this article, we will explore five smart strategies to ensure a seamless move without the stress of being homeless. So, let's get into the options that will help you smoothly make the leap to your new dream home!

Bridge Loan: If you have substantial equity in your current home, you can opt for a bridge loan to finance the purchase of your next home. A bridge loan is a short-term loan that allows you to borrow against the equity of your current home to cover the down payment and closing costs of the new home. This way, you can buy the new home before selling the old one. Once your current home sells, you can use the proceeds to pay off the bridge loan. However, it's important to be cautious with this option as bridge loans often come with higher interest rates and fees but it can be worth the cost if you don’t want to miss out on the home of your dreams.

Ask for Rent Back: When selling your home, you can negotiate with the buyer to arrange an extended escrow period or request a rent-back agreement. In an extended escrow period, the closing date is delayed to give you more time to find and move into your next home. Alternatively, in a rent-back arrangement, you can rent your own home back from the new owner for a certain period after the sale is complete. This allows you to stay in your current home temporarily while you finalize the purchase of your new home. In a competitive environment, some buyers may allow you stay for free to make their offer standout from the rest.

Live with a Family Member: If possible, you could consider staying with a family member or close friend temporarily until you find your next home. This option allows you to avoid staying at a hotel while you search for a new property. Staying with someone you trust can also provide you with the flexibility and time needed to make the right decision for your next home purchase.

Simultaneous Close: In a simultaneous closing, you coordinate the closing dates of both the sale of your current home and the purchase of your new home. This requires excellent communication between all parties involved, including both sets of buyers and sellers, as well as the real estate agents and lenders. The timing needs to be precise to ensure a seamless transition from one home to the other without the need for interim housing. I highly recommend you work with experience professionals in this type of transaction.

Sell, Rent, and Buy: Another option is to sell your current home and rent a temporary home or apartment while you search for your next home. This allows you to be flexible and not rush into a new purchase. Renting for a while gives you the freedom to explore different neighborhoods and take your time in finding the right home that meets your needs and preferences. This is especially true if you are moving to a completely new place.

Regardless of the approach you choose, it's essential to plan ahead and be well-prepared for the challenges of a simultaneous move. This includes having a clear understanding of your financial situation, working closely with real estate professionals, and staying organized throughout the entire process. Moving between homes can be stressful, but with careful planning and the right strategy, you can make the transition as smooth as possible.

Jeet Sangha, REALTOR/INVESTOR

San Jose, CA