What to Know When Buying and Selling a House at the Same Time

With careful planning and smart timing of the market, it’s possible to buy a new house and sell your old one at almost the same time—sometimes even the same day.

Whether you’re in the market to buy a new home or sell an old one, there are a lot of steps in the process. It can seem even more overwhelming if you’re having to buy and sell at the same time. We’ve mapped out the steps to take and explained the overall process to help you navigate buying and selling concurrently with ease.

Buying and selling at the same time – What does it mean?

Unless you’re a first-time home buyer, the odds are when you’re looking to buy a new home, you’re also living in a home that you will want to sell. Buying and selling at the same time doesn’t mean that you’ll be closing two properties on the same day, although that can happen. It means that you have one house on the market while searching for a new home. It’s a process that can be stressful, but people do it successfully all the time. The good news is professionals in the industry, from real estate agents to lawyers and home appraisers, are all adept at navigating these types of transactions to help you through the process.

Should you try to buy and sell at the same time?

Many people don’t have the luxury of deciding whether to buy and sell at the same time, it’s something done out of necessity. If you’re relocating for a job or some other life event and can’t carry two mortgages, you’ll be looking at buying and selling concurrently. You might also need to sell your current home in order to have the down payment on the home you plan to buy.

If trying to do it all at once seems too much for you, or you have the flexibility to do one before the other, you might consider selling before you buy, or buying before you sell.

Pros and Cons of selling at the same time

The Pros:

• You’re less likely to have a gap between housing. This eliminates the need to rent or find storage during a gap period, as you might have to when selling first then buying.
• You can consolidate the process. You’ll be able to schedule appraisals and closings all within a shorter timeframe than if you wait to start looking for a new home after you sell your old one, or vice versa.
• You might be able to use one real estate agent for both transactions. This means working with one person who understands your situation.

The Cons:

• Financing is more difficult. Depending on your financial situation, it could be harder to qualify for two mortgages at once.
• Timing is critical. Even when buying and selling at the same time, there’s a chance your home will sell before you close on a new one and you’ll have to find temporary housing.
• You’re adding more people to the negotiation processes. For every seller there’s a buyer, and for every buyer there’s a seller.
• There’s more opportunity for delays. When dealing with negotiations on two ends, there’s twice the chance that scheduling issues will arise.

Know your market – why it matters

Before you decide to take the plunge and buy and sell a home at the same time, analyze the current housing market and give some thought to whether it’s the right time. You might be better off buying first and selling later or selling your home now and waiting to purchase the next one. The type of housing market matters in this case because if you’re in a seller’s market your current home might sell fast. It’s good to be prepared!

Characteristics of a buyer’s market

• Supply of available housing exceeds demand
• Properties are on the market for weeks (or days) rather than months
• Seller’s cut the price of homes on the market to encourage offers
• Properties sell below list price

Characteristics of a seller’s market

• Demand for housing exceeds supply
• Houses sell as soon as they’re listed
• Real estate prices increase
• Properties sell above listed prices, and bidding wars for homes are common

How to identify the market you’re in

If you’re unsure, there are a few steps you can take to identify whether you are in a seller’s market or a buyer’s market:

Consult with a real estate agent

They are on the frontlines of real estate and are the experts on local market trends.

Research the market

Pick up local real estate books or search listings online and pay attention to whether listing prices are being dropped and how long properties are staying on the market.

Analyze the inventory

Divide the number of homes on the market in a particular zip code by the number of homes that have sold in the past 30 days. If the results are between 5-7, you’re in a balanced market. Anything higher and it’s a buyer’s market, meaning there is more inventory than people searching for new homes. Results below 5 indicate a seller’s market. Zillow provides current data on for-sale inventory to aid in your analysis.

What to expect when buying and selling at the same time

Navigating buying and selling at the same time brings added stress to the process. You’re worried about whether your home will sell in time to buy the new one, but hoping it doesn’t sell so fast that you have a gap in between. You’re negotiating offers on two ends, while dealing with scheduling inspections and appraisals, all while keeping your current home in top shape for showings. Understanding the steps involved can help mitigate your stress:

1. Get your home ready to sell as quickly as possible. Accomplishing a few repairs on your to-do list, sprucing up the landscape and staging the interior will better position you to sell.
2. Price it right. Look at comps of your area and consider an appraisal to put your house on the market at a price that will get it sold fast.
3. Find a real estate agent who can handle both your new purchase and the sale of your own home. This is most likely only possible if you’re relocating in the same state, but it can streamline the processes involved by having just one point-person.
4. Get pre-approved for a mortgage. It is more challenging to get pre-approval when carrying two mortgages. Loan officers will look at your income as mortgage payments shouldn’t exceed more than 28% of annual income. A good credit score of 740 or higher is also helpful.
5. Come up with a down payment. Most people use the proceeds from the sale of their home to finance the next purchase. If you haven’t sold your home yet, you’ll need an option for a down payment, such as a bridge loan or a home equity line of credit.
6. Put in an offer and schedule inspections and appraisals.
7. Schedule your closings. Allow 30-60 days between accepting an offer and the closing date to accommodate contingencies, title research and other issues.

If your home sells fast, how long do you have to buy a new one?

As far as taxes are concerned, thanks to changes in IRS tax codes, you no longer have to worry about reinvesting in a new property right away if you are buying and selling a primary residence. If you’ve lived in the home you’re selling for at least two years, you’re exempt on paying capital gains tax for up to $250,000 of the income if you are single and up to $500,000 for those married and filing jointly.

Handling buying and selling at the same time with ease

A traditional real estate agent can help you navigate the process of buying a new home while selling your current one. If you prefer to sell your house as-is, a cash-buyer marketplace like Sundae can also help ease the burden of simultaneously buying and selling a home. Sundae will prepare your listing and do the work of comparing offers for you, and let you dictate the pace of the process. You can close in as little as 10 days or up to 60 days if needed.

Concurrent closings – Do you need to buy and sell on the same day?

A concurrent closing is defined by a home sale occurring within a short time of a home purchase. It can happen on the same day, but doesn’t have to. Whether you’re scheduling for the same day or a few days apart, schedule the closing for the sale of your old home before the purchase of your new home. When using the proceeds from the sale to purchase the new home, you will need to allow enough time for the money to transfer, unless you have another source for the down payment and closing costs. Consider using the same title and escrow companies for both the sale and the new purchase, to simplify the process and reduce the number of wire transfers needed to take the funds from one account to another.

Planning for closing costs when buying and selling at the same time

Closing costs are out-of-pocket costs at the time of closing, determined by a percentage of the home sale. You will be expected to come to the closing with funds to cover this, which you can get from personal funds, a home equity loan, or a gift from family.

The key to making buying and selling a home at the same time work is communication. Be sure to stay in touch with your real estate agent, and work together to schedule appointments, inspections, appraisals, and all the necessary steps to get your home sold and your new one purchased with as little delay as possible.