Once you have made the decision to buy a new home, you also have to take on the responsibility of selling your existing home. Failing to sell your home in a timely manner could mean you have to carry two mortgages for a period of time. Here are some tips to help you balance buying and selling.
Evaluate Your Finances
Before starting your search for a new home, take the time to review your finances. You want to ensure that you have enough funds available to get approved for a new home loan and also pay your existing loan if you are unable to sell in a timely manner.
You also have to consider what it will take to prepare your existing home for the market. For instance, you have to factor in staging, repairs, and contingencies that might be required by a potential buyer.
It might be tempting to simply go through your existing lender for the new home, but your should take the time to shop around for comparison rates. There is a possibility that you might find a more reasonable loan with lower interest rates.
Research the Market
You need to have an understanding of what type of market you are facing before listing your home and searching for a new one. Whether the market is currently skewed towards the seller or buyer can limit some of your options.
For instance, if it is currently a seller's market, you might find it easier to sell your home, but have trouble finding a new home. The fact that you still own a home could make you less desirable to sellers because there is a fear your funding might fall through.
Your real estate agent can be instrumental in evaluating the market and determining how you can buy and sell at the same time.
Include a Contingency in Your Purchase Agreement
Your purchase agreement could be your saving grace if you are unable to sell your home before closing day on the new home. You could include a contingency in the agreement that allows you to back out of buying the new home if your current home does not sell by a certain date.
The contingency allows you to keep your earnest money while focusing on selling your home. Depending on the seller, he or she might be willing to allow you additional time on the contract if your home has not sold by the agreed upon date.