How do you go about buying and selling at the same time?

DH and I have been living in our townhouse for almost 3 years. We're ready to sell and move into a house, but we'll need the profit from our townhouse to use as a downpayment on the new place. We've never done this before (we both lived with our parents prior to buying the townhouse) and we're trying to figure out timing...how do you go about buying and selling at the same time? I'm just worried we might either find a buyer before we find a new place, or vice versa.

Re: How do you go about buying and selling at the same time?

We saved for the DP on the new house first. Many sellers won't deal if your purchase is contingent upon a sale. We bought house, then sold apartment 2 months later.

I think most cases, you'll need to sell first so you have cash.

Re: How do you go about buying and selling at the same time?

Yes, the previous poster is right. You usually can't line it up so that you sell and then buy immediately, if you need to sell the first property to buy the second.

The biggest issue is that it is a very competitive market, and having your offer (and the contract to purchase) being contingent on the sale of your townhouse closing is a big negative. It creates complication and uncertainty for the seller... no seller wants to take their home off the market, go to contract, prepare to move, and then find out that you can't get your mortgage (or that the person buying your home can't get their mortgage, and therefore you can't get yours). Or that there are title issues that are going to hold up your sale and impact the timing of their sale. With the market being so competitive, and with demand exceeding inventory in many areas, sellers don't need to consider offers with contingencies, and most won't.

The other piece of it is the time pressure. Most buyers want to take their time finding the "right house," and the ticking clock adds more stress to the buying process if you don't have a place to go after you close on your townhouse. Most buyers are better off either staying with family or going into a rental, even if short-term, while they continue their house hunt. Then, when they find the right home, their offer is much more desirable to sellers because they have nothing to sell, no contingencies, and can usually be a bit flexible on closing time frame (not all sellers are prepared to move out in a rush).

Also, if you want to get top dollar on your townhouse, you want to be able to accommodate a buyer who needs to close quickly, and not limit your buyer pool to those who can wait to close until you find your next house. With concerns about rising rates and locking good rates in, most buyers want to close asap.

I have had a few seller clients who have been able to go straight to their new home, but it's rare and it's messy. I am in the middle of selling a listing now, and my sellers are going into contract to purchase a new home that is contingent on the sale of their current home, and it's been an uphill battle from day one, and there have been so many challenges to deal with.

Most people who have to sell to buy their next place sell first, make temporary, interim arrangements, and then buy. Not super convenient to move twice or put things in storage, but that's usually how it has to happen.

Let me know if I can help!

Message edited 4/16/2014 6:01:05 PM.

Re: How do you go about buying and selling at the same time?

Sell and then rent a place until you buy a home.

Any house that's decent and going to have no problems getting offers is not going to have a seller that will be willing to take a buyer's selling contingency. If I were to sell my house and a buyer made an offer that was contingent on them selling their house would likely not be considered.

Sure you can try to "time" it to sell then buy at the same time, but why would it be worth rushing the buying process? Also you will likely save money going this route as you would be presenting stronger offers to sellers when you are coming in renting with flexibility to close, you won't have to overpay.

Re: How do you go about buying and selling at the same time?

I have a brother and 2 friends how actually did just this. They sold their co-op and timed it perfectly. Some financial institutions offer what's called a bridge loan. The bridge loan is secured to the buyer's existing home. The funds from the bridge loan are then used as a down payment on the move-up home.
I believe you can also try the home equity route but most financial institutions will not offer a home equity if your home is already on the market. So it can happen.
On the flip side, DH and I put our co-op for sale and it sold a lot faster than we anticipated. We did find a home but it fell through. If all the stars were aligned, we had planned closing dates that were within days of each other so it could have happened.
I think our situation happens pretty often though. I agree with the pp. Sell, find alternate living arrangements while you house hunt if you can't find a financial institution that can assist you with a bridge loan.
Good luck!

Re: How do you go about buying and selling at the same time?

How do you go about buying and selling at the same time?

Im not a frequent poster, but had to weigh in here since we just went through this process. I agree with what the majority of others have said- focus on selling your place first, make temporary arrangements to rent/stay with family once its sold, and then move forward with a new purchase.

We also moved from a town home to a larger single-family home and initially tried to line up the sale/buy so we could move right from one place to the other. It was a battle to get our sellers to accept the contingency, but they did....and then literally one day before we were scheduled to close on both, after packing up our entire house, our buyer's financing fell through and we had to let the new house go. This was in November and it was absolutely devastating for all parties involved. We had to then start both processes over again- re-list, find new buyers, start house hunting, etc.

In the end, we did sell the place, and were able to negotiate with the buyers a Use & Occupancy agreement, where we closed on the sale but then rented back from them for 30 days to help buy us some time. During that time, we found a new house and started that process, but ultimately still had to put our stuff in storage and stay with family for 6 weeks until the sellers were able to close- just last week!

So its been a crazy rollercoaster ride, but I do feel things worked out for the best. For one, we are definitely much happier with this house than the one we were originally supposed to buy back in November. As some others have pointed out, having that ticking clock really adds a lot of pressure, and with the first house we would have been settling on many things we werent thrilled about just because we were running out of time.

Good luck!

Re: How do you go about buying and selling at the same time?

Re: How do you go about buying and selling at the same time?

We sold our co-op and then bought a house. We attempted to do the two at the same time, but it was nearly impossible to get a seller on the house front to agree to a contingency (understandably so, especially with a co-op and unknowns w/ board approval). So we ended up selling our co-op, and then staying with my parents for 3 months while we found and bought a house.

How do you go about buying and selling at the same time?

Our lender actually did approve us to still move forward with the purchase, even without the sale, but we werent comfortable carrying two mortgages for various reasons, which is why we put the contingency clause in the contract in the first place. We obviously never thought things would play out this way, especially after receiving a firm mortgage commitment letter from our buyer weeks in advance, but we learned that a deal is not done until its done, and no matter how diligent you are, there are some things you cannot control. The whole thing was a complete debacle, and yes, a lot of wasted time for everyone, which is why my advice is to focus on one transaction at a time.

Re: How do you go about buying and selling at the same time?

It was tricky. We ended up accepting an offer on our house on the first day of viewings (we had a small bidding war, which was awesome, but unexpected). We put in an offer on a house shortly after. It was accepted but then someone out bid us by a lot before we got into contract. If that went through, it would've been a pretty smooth transition and we could've closed both houses in the same week. It took us a couple more months to find a new house. We were in contract before we closed on the house we owned, but ended up having to live with in-laws for a couple of months while we waited to close on new house. I wish it was more seamless, but we had to sell our house first in order to get house no. 2.

Re: How do you go about buying and selling at the same time?

SIL made out awesomely this past year.

BUT she was selling a house, not a townhome in a very desirable location not near the flood zone. They bought new construction and I believe made enough income to show they could carry 2 mortgages AND had paid way ahead on their first mortgage.

The house was on the market for not even a week and she had two offers, one in cash which she went with.

This is off topic but she said it was heart-wrenching because the other buyer, the husband was a 9/11 survivor but they still had to get approved for a mortgage.

Re: How do you go about buying and selling at the same time?

We are going to be facing this battle at some point within the next year or two (I imagine anyway). I think the best thing to do is to expect that you will need to live somewhere else for awhile. I already asked my dad if we could live with him for a short while if need be as we are looking for another place.

ETA: Surely, it can work out. When my parents moved from one house to another, everything went smoothly. We went from the first house right to the next, but I think having back-up is a good idea.

Message edited 4/18/2014 10:46:44 AM.

Re: How do you go about buying and selling at the same time?

We waited until our first place was under contract before looking at new homes, however our plan all along was to move in with our parents. We offered on our new house while still owning our first, we got approved to carry both mortgages and lived with parents for 1 1/2 months.