Buying a home can be a pretty exciting time as you think about moving day, decorating ideas and your future. Selling a home can also be exciting as you look forward to that fat check at the end. But buying and selling at the same time? That’s something you’ll want to handle carefully if it’s to go off without a hitch. Selling your current home to raise funds for the next one is pretty common in real estate transactions, but the stakes are high. If the buyer backs out, you’ll be left with no cash to fund the home purchase. If you so sell, but the home purchase falls through, then you’ll be left homeless. While there’s no way to protect yourself against everything that can go wrong, you can avoid the more predictable aspects. Here are six mistakes to avoid when buying and selling at the same time.
1. Waiting too long to prep your home for selling
Before a home can be listed, it has to be spruced up a bit. The walls might need a new coat of paint, the carpets a deep clean and the rooms will have to be decluttered. This takes time and when you’re simultaneously buying and selling it’s shouldn’t be left to the last minute. Start prepping your home for selling before you start submitting offers and visiting open houses. Otherwise, you could get an accepted offer only to find yourself scrambling to get your home ready for selling. With the current buyer’s market in NYC, you may not have a hard time finding a place to buy but finding a seller will be a different story.
2. Not having a backup plan
A real estate transaction has a lot of moving parts, and when you double the size of the transaction, then the chances of something going wrong goes up. Scheduling for a closing day that will suit you (for both transactions) will be especially difficult. Have a backup plan ready to go if can’t buy and sell at the same time. An emergency fund will provide the cash needed for a short hotel stay, but you may also have to look into a short-term rental. Your guiding principle through all this should be “Hope for the best but expect the worst.”
3. Buying too big
One of the most common mistakes that simultaneous buyers and sellers make is the same one first-time buyers make; they make their eyes bigger than their stomachs. Before you begin shopping for a new home, it is vital that you get pre-approved for a mortgage. It’s the first step towards getting qualified for a mortgage and will give you a good idea of how much you can expect to be approved for. Otherwise, you’ll waste your time looking at homes that you can’t afford. Know what to expect, and it’s less likely that a deal will fall through.
4. Not having a large enough cushion
The real estate market can be very volatile. Even a safe haven like New York isn’t without sudden price drops and times in the year when the market goes cold. You need to sell your current home for a minimum amount to pay for your next one. But ask yourself, can you still do that if the market softens and you have to revise your asking price by say $20,000? If not, then you can wish goodbye to your down payment. Give yourself a little cushion on what you need to sell for to pay for a new home. If you need all the money you’ll make from the sale to complete the purchase then it’s better to assume you’ll get less than expected.
5. Agreeing to too much just to get the deal done
With handling two different transactions at once, you’ll be under a lot of pressure during negotiations. Those you’re dealing with may be aware of your situation and could be using that to make extra demands. Don’t cave in just because you want to get the deal done. Make sure you’re okay with what you agree to and that you’re not being taken advantage of. If you need time to think something over, then tell them. Yes, this will delay the closing, but that’s better than an expensive financial mistake.
6. Using two different real estate agents
Things are already messy enough with handling two transactions at once, don’t make it messier by having two real estate agents. Instead, have one agent who can coordinate both for you. You’ve got a far better chance of closing on both simultaneously this way. The only exception to this would be if you’re moving between states. If an agent you like works exclusively with either buyers or sellers, not both, then ask for a recommendation within their own brokerage. You can still keep things smooth if both transactions are under the same roof.