Let’s say you are currently living in a house, but you have decided it's time for a move. Perhaps you want to upgrade to a bigger house or maybe downgrade to a smaller house. What is the best way for you to make this transition when it comes to buying and selling? Should you buy first, sell first or attempt to do them both together?
This is a great question and one that many clients have to consider when deciding to move. In this post, I go through the different options that are available as well as the pros and cons of each option to see which one makes the most sense for you.
The options
There are essentially 3 options to consider as I discuss below:
Option 1: Attempt to buy and sell at the same time
In this option, once you find a house that you want to buy, you make an offer on the house with a Schedule A, which makes your offer conditional upon selling your current house.
Pros:
It could make financial sense, especially if you need the money from the sale of your current house to move into the new house.
Cons:
A common belief is that both transactions can be set up to close on the same day and you will be able to walk out of your existing house and into the new house. The reality of this is that it is very difficult to line up both closings (the selling of your current house and the buying of your new house) on the same day.
If the sale of your existing house closes, but the new house does not, you will need to find a place to stay temporarily as well as a place to store all your possessions.
An offer with a Schedule A is less competitive, especially in scenarios with multiple bids, and may often not be considered, which could result in you losing out on the house you really want.
You are at risk of getting bumped. If you have made an offer on a house that has been accepted, the seller can continue to show the house to other buyers, and if they get another offer without a Schedule A, they have the option of giving you the option to remove your Schedule A. If you are unable to remove this condition, the other buyer can bump you which means you would again lose out on the house you want to buy.
Option 2: Buy the new house, and then sell your current house
In this option you would make an offer on the new house without a Schedule A and carry both mortgages until you sell your current house.
Pros:
You are in a position to make competitive offers on the house you are buying and are more likely to get your first choice of house.
You could still try to line up both closings, however, you do not risk affecting the purchase of your new house based on the sale of your existing house.
Cons:
This option may not be financially feasible to all buyers, who need the money from the sale of their current house to purchase the new house.
Option 3: Sell your house first, and then buy
In this option, you first complete the sale of your current house. You then move to a temporary place while you look for your new house.
Pros:
Since you have already sold your house, you have one less transaction to focus on when purchasing a new property.
Financially, you are better placed having completed the sale of your current house.
You are in a position to make competitive offers on the house you are buying and are more likely to get your first choice of house.
Cons:
You will need to find a place to stay temporarily, however, as mentioned above you might end up in this situation even if you decide to complete both transactions at the same time. However, this time you can plan for this situation and be better prepared.
My recommendation for most people is to go with Option 3 if possible as it places you in the best possible situation to get the house you want in a competitive market.
If you are thinking of selling, get in touch and we can set up a no-obligation meeting to discuss the best way forward. I will guide you through the details of these steps and more based on your current needs.
Kyla Miranda Realtor ®
Keller Williams Platinum Realty
709-325-5152
kylamiranda@kw.com