Plenty of people find themselves buying and selling a home simultaneously, but knowing that others have gone through the same stress does not make it one bit easier. After all, the stakes are so high: If your buyer backs out, you don't have any cash to land your next home! Or if your own purchase falls through but your current home sells, you're homeless!
It's all like walking across the Grand Canyon on a tightrope: The tiniest thing goes wrong, and you fall.
It turns out that most buying-and-selling mistakes are easily avoidable—or at least predictable. Follow these eight tips to enter escrow with eyes wide open.
1. Waiting too long to prep your home for selling
Every home needs a little work before selling. You might need to repaint some scratched walls, fix broken decking, or add grout in a rarely used bathroom. Don't wait until the last minute to kick-start this process, otherwise you could wind up in a bind.
2. Skipping the backup plan
When you're buying and selling simultaneously, the number of moving parts doubles. And if any of those parts gets jammed, it can throw off both transactions.
For example, one Miami REALTOR® was recently involved in a three-way transaction where the sellers of property A wanted to buy property B—and the sellers of property B wanted to buy property C.
You should assume it won't work out so that you have a plan in place in case everything goes wrong. Keep your emergency fund well-stocked. In a best-case scenario, you may simply need a hotel for a week, but you may also find yourself looking into short-term rentals. Have cash on hand—in addition to your down payment funds—to survive the setback.
3. Buying too big
"One of the biggest mistakes that we see that simultaneous buyers and sellers make is the same one that many first-time buyers make: They fail to get pre-approved on their new loan," says one Orange Country Realtor.
Pre-approval is essential, because it puts a stop to unrealistic dreaming by telling you exactly what size of house you can afford.
4. Working with too little cushion
You know what price your house should sell for. But what if the market softens? If you're forced to take an offer that's $20,000 less than expected, there goes the down payment on your new home.
If you're hoping to use the entire sale price as a down payment on another home, move forward with the assumption your home will sell for less than expected.
5. Failing to compromise
Don't forget you're not the only human in a stressful situation. That person selling your dream home? And the buyers under contract for your current place? They're all probably stressed, too.
So keep that in mind when issues come up—for example, if the buyers need an extra week of escrow because there was an issue selling their home, or the sellers don't think they need to fix a leaky pipe for you.
6. Using two different real estate agents
Expect this already messy process to get even messier if you're juggling agents for your listing and for buying a new home. Simplify things by using the same agent for both transactions.
Obviously if you're moving out of state, look for a reputable buyer's agent in your new location.
7. Closing on a Friday...
While you should work with your agent to determine the best timing, you'd ideally want to finalize the sale of your current home first, and then close on your new one. Try to aim for closings within two or three days of the other—"and never on a Friday," says one Arizona Realtor.
That's because bank transfers can take a few days to go through. In order to ensure there's money in your account when the time comes, buffer a few days to transfer funds.
8. ...or late in the afternoon
When you're scheduling those closings, aim for the morning—especially on the sale of your current home. Banks usually stop wire transfers by 3 p.m. in the time zone where the property is located. Closing in the morning allows extra time for the money to hit your account.
By: Jamie Wiebe Client Direct
Crissi Avila will teach you how to buy smart. We’ll look at location, development, and turnover so you can spot opportunities long before most even start considering them.