And what should you tackle first? Should you get an offer on your home before you try to find a new place to buy? Or should you find the home you want before putting yours on the market? And will a bank even allow you to buy without selling anymore?
These questions are all valid because real estate has changed in the past few years. Before the real estate banking crisis of 2008, it was very easy to leverage the equity you had in your current home. By opening a home equity line of credit, known as a HELOC, you could borrow up to 95 or even 100 percent of your home's value and use that money as your down payment for the purchase of your next home. You could close on the new home and then sell yours immediately afterwards.
Nowadays, the equity in your home has likely slipped away and lenders rarely allow such leveraging. It's a new market and we have to find a new way to do things. It was stressful before and it can be even more stressful now. It's difficult to precisely time a real estate transaction but for many, the financial stakes are high.
Though there may be more stress and the process can be more difficult, there is still a way to buy and sell a home at the same time. However, before you begin, you need a well-thought-out plan, a good agent on your team and be fully prepared.
Of course, there are things you and your agent can do to increase the odds that your multitasking will pay off. Here are five tips to get you started:
1. Know your finances inside and out. This is a no-brainer. You need to know not only what you can afford to buy, but also, what your house is worth before you even get started. Talk to your real estate agent and consult a mortgage banker or broker for loan pre-approval.
2. Start packing. Start boxing up stuff you don't need easy access to. Get rid of all the things you won't need until you've moved into your new home. This will help make your home show better and starting the packing process now will make it that much easier to move later. You may need to rent a storage unit temporarily for your stuff.
3. Do whatever quick fixes you need to do to sell your home. Do you have a toilet that constantly runs? Is your kitchen right out of the 1950s? If so, get busy fixing those things that could cause your home to sit on the market longer than necessary or affect your home's value.
4. Start home shopping and learning the market. Start going to open houses and seeing what's out there. Begin the process of elimination: What are the must-haves and the deal-killers?
5. When you're ready, list it. Depending upon your situation, you might want to list your property toward the higher end of its value range, once you're actively in the market. This can buy you time while you shop for your next home. And who knows? You might get more money. (It still happens.)
Starting now helps reduce the stress later
From this point on, the situation can play out in any number of ways.
For example, you might find a home you love before you've got a firm offer on your house. In that situation, you could make the seller an offer with a contingency that your offer is subject to the sale of your home.
On the other hand, let's say you're the seller and someone has made a solid offer on your home. Great. But you haven't found your next home yet. Here, you might ask the buyer to let you stay in your home for a month or more as a renter, while you continue your house search.
There are hundreds of variables and the possibilities, depending on your local market and your personal and financial situation. The main thing is to do as much of the buying and selling homework as you can up front. This will help you react more quickly later. And best of all, you'll be less stressed.
See more tips about buying and selling a home at the same time.
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