How to Handle Buying and Selling a Home at the Same Time
Earlier this month we talked about some of the things to consider when trading in your old home for a new one, and one of those items was the timing in which you sell your current home. We understand this can seem a little daunting at first but with a little finesse and a small leap of faith, this transition can be smooth and painless.
When to Buy
Generally, when the home you’re purchasing is a new build, you’ll be buying the home before you sell your existing one. When you make your offer to purchase, be sure to include a condition that your current home be sold before you can close on the new one. This prevents you from being legally obligated to hold two mortgages if your old home doesn’t sell in time. Unless, of course, you are in a situation where you can hold two mortgages, this should also be stipulated in your offer.
Lenders Help Bridge the Gap
It’s ideal to have a solid financial status before buying a new home, especially if you have to sell your old one first. The reason for this is there are products available to you by your lender to help bridge the gap between selling and moving.
For example, if you currently own a home and you’re purchasing a new build, you can use a HELOC (Home Equity Line of Credit) on your current home to finance the down payment, or part of it, on your new one. This ensures you aren’t out of pocket for tens of thousands of dollars while you’re still paying the mortgage on your existing home. Once you close on the new home, the equity proceeds from the sale of your existing home will be used to pay off the HELOC.
Your HELOC can also help with closing costs, legal fees, moving and any other costs associated with buying a new home.
Throughout the construction of your new home, you’ll want to stay in touch with your builder to be sure your timing is right when listing your current home for sale. Build times can vary in Edmonton’s housing market. In a higher demand housing economy, build times can be longer due to more homes being under construction at once, while in a slower housing economy, build times can be much shorter. By staying in touch with your builder, you’ll be able to make an educated decision on when to sell your home based on how much time is left to completion.
When to Sell
List too early and you may have to move out before your new home is ready. List too late and you may have to take possession of your new home before your current home is sold.
Since the average time on market is 45 days, you’ll want to list 60 days prior to your projected possession date. That gives you the flexibility you need to negotiate a possession date with your buyers and could be a win-win all around. However, by listing this close to your possession date, you’ll want to be aggressive in your asking price to ensure you get offers.
Listing at a value that is a bit too high will potentially put you in a position of plenty of showings with no offers. In this situation, you may offer the new owners a rental agreement if you prefer to rent back from them until you are able to move into your new home.
Ultimately, working with your new home sales representative to time the sale of your existing home is an ideal solution. Not only is your sales agent fully informed on the status of your new home build, they are also educated in the current housing market situation and can make recommendations that will work for both parties. By working together, you can make this daunting transaction a lot smoother, making your new home even more enjoyable in the end.