Thinking of selling and buying a house at the same time and wondering how? In the world of real estate, we don’t often see anyone selling and buying a home on the same day. But that doesn’t mean it is impossible. It just requires a fair bit of luck and a good amount of planning and preparation.
How to buy and sell a house at the same time?
It can be quite tricky to wear a seller’s hat and buyer’s hat at the same time. You might have many questions in mind such as where to live between selling and buying, how to deal with your mortgage etc. Below we will discuss a few ways to make the process easy for you.
Extend the settlement period
A simultaneous settlement of two houses on the same day can sound great but it is something difficult to achieve in real life. Since both the settlements are dependent on each other, it can cause problems if one of them is delayed.
A good option to achieve a simultaneous settlement is by having an extended settlement period. For example, if you sell your home first, you can set an extended settlement period of 3 to 6 months in the contract as a condition of sale. During this period, you can buy a new house and complete its settlement. Similarly, if you decide to buy first, you can request an extended settlement period from the seller. This should give you enough time to sell your existing house and do the settlements.
Going for an extended settlement period depends on how flexible the other party is. You can consider offering an incentive to the other party or utilising the negotiation skills of a good real estate agent to make it work.
Offer “subject to completion of sale”
In this option, you buy a house subject to the sale of your own house by putting special conditions into your contract. You only need to pay the money after selling your existing property.
This is a great way to avoid the hassle of finding a place to rent before moving to a new house. So, you are saving huge money and effort by having a place ready to move into after the sale of your current property.
With this approach, an important thing to note is, the seller may still prefer other buyers with no conditions unless your offer is really appealing. So, you may have to go a bit generous with your offer which can tempt the seller to wait for it. You can also think of setting some deadlines in the sale contract to give a certain level of assurance and peace of mind to the seller. This can be specifying a date by which your contract should go unconditional, another date by which your contract should settle, etc. Failing any of these conditions, either party can bring the contract to an end immediately.
If you want to purchase a new house before selling your current one, you can consider applying for a bridging loan. A bridging loan, as the name implies, serves as a bridge between buying a new house and selling your existing house.
A bridging loan is typically an interest-only loan that is charged on your existing loans. Usually, you don’t repay the loan amount during the bridging period and the interest on your existing loans will get added up each month. The sum of these interest amounts will then be added to your final loan amount once your existing property gets sold.
Selling and buying a house at the same time becomes easier with a bridging loan. Usually, It is essential to have a fair bit of equity to qualify for a bridging loan. Various lenders may have different conditions and use different models to calculate the bridging loan amount. It is a good idea to check with the lenders beforehand and know whether you will be able to afford the bridging loan amount or not.
Selling and buying a house at the same time is a major financial decision and you may find it hard to handle them together by yourself. That is why it is important to find an expert real estate agent who can handle this all for you, help you make informed decisions and give you the right advice during each step of the process.
Local Agent Finder helps you find top performing real estate agents in your area and compare each agent based on their marketing strategies, commission rates, sales history, and reviews from other homeowners. A good real estate agent will be able to bring both the buying and selling processes in line, increasing your chances of a simultaneous settlement.
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