All of which can result in a less than satisfactory outcome.
Fortunately, there are things you can do as a seller to limit your financial risk and still be able to move into another home.
Gather data
Find out what you need to know before listing your home for sale to help you make an informed decision about your options.
Begin by asking your real estate agent the following questions:
- ⬥ What is the best timeline for selling my home right now?
- ⬥ When should I start looking for another home? How long should it take to buy another home?
- ⬥ How much can I afford? Assuming I’m able to get the price I’m asking – or close to it – will I need to arrange financing on the new home?
- ⬥ Should I plan for a gap between the sale of my home and the purchase of another? If so, how long might the gap be?
Assess the data
As you pull together the information consider the following:
Having two mortgages is not a good trade-off to having an easier move.
If you were to apply for a new mortgage but are relying on the sale of your existing home for the down payment you could find it hard, if not impossible to get financing.
Contingencies
A traditional way to ensure that you’re not stuck with two mortgages is to include a contingency in your offers.
When you make your home purchase conditional on the sale of your current home you give yourself an escape clause should things not go as planned.
What are the market conditions?
Market conditions play a key role in the timing of your home sale and purchase.
For example, if it’s a buyer’s market it could take longer than normal to sell your home. In this scenario it’s a good idea to have a solid contract with a buyer on your existing home before placing an offer on another one.
Have a “Plan B”
Contingencies in the contract will let you either reschedule the closing date – or pull out of the contract – with little to no financial loss.
There are other options that you could consider, depending on the situation:
Rent something short-term if you’ve sold your home but aren’t able to find your next home. If you have things that won’t fit in your new place, simply keep them in a storage unit until you buy your new home.
Make arrangements with the buyers to rent back your home for a short time.
Rent your home out and use the rental payments to offset the cost of two mortgages until it can be sold.
If you have it, use your savings for the down payment on your new home. Remember to include estimates for closing costs, inspections and moving expenses as well.
