The holy grail when selling your current home to purchase a new home is moving just once.  But that’s the thing about holy grails.  Everyone wants it, but it’s pretty hard to come by.

That’s not to say it can’t be done, because it can.  For instance, if you are one of the fortunate folks who can afford to buy a second home without selling your first, you will have a relatively easy time making it work.  However, if you must sell your first house before buying another, it will take a special set of circumstances to allow you to move seamlessly from one home to the other.

For the sake of this article, we’re going to assume you are in the majority and must sell to buy.  Therefore, you have two complicated transactions that need to go as flawlessly as possible.

Let’s start by looking at the ways things can go wrong, so you can be mindful of managing those factors throughout the process.  Be aware, the factors will be different if you’re in a “sellers market” or a “buyers market,” and if you’re moving to another city, you may have one set of market conditions where you’re selling and another where you’re buying.

Here’s how it breaks out, depending on the health of the real estate market in each place.

 

Situation 1: Buyer’s Market (homes are selling slowing) where you live; Seller’s Market (homes are selling fast) where you’re moving

Get ready for a stressful few months.  This is the most challenging situation to orchestrate a direct move from one house to the other because you are in the disadvantaged position on both ends of the move.

What could go wrong and how to avoid that happening.

 

  1. You start shopping for your new home before you get your current home under contract.
    This is a sure fire way to cause yourself heartbreak.  If these are the market conditions you face, do NOT start visiting    homes in person until you are in a position to make a reasonable offer to purchase.  In a seller’s market, almost no seller will accept an offer with a sale contingency unless your home is already under contract AND your buyer is past the inspection or diligence period.  Don’t put yourself in a situation where you could fall in love with a home you can’t compete for.

 

  1. Your buying process is delayed because your current house is taking forever to sell.
    If you want a fast sale in a buyer’s market, your home will need to be in excellent condition and your price will need to be as low as or slightly below that of the next best choice.  Meaning if a buyer comes along, you must give her a reason to pick your house instead of one of the many others she’s considering.  Remember, buyers are willing to pay market price, not the price you need to recoup all of your costs.

 

  1. You put your house under contract, but accept terms that will make it difficult for you to close on another home before you need to be out of yours.
    Consider the proposed inspection or diligence dates and the closing dates carefully because it will affect your ability to offer attractive terms to the seller of the home you wish to buy.  In a seller’s market, you will likely be competing with several other buyers for the property of your dreams.  If a seller is even willing to consider your offer with a sale contingency, he’ll want to know your buyer is past the point where she’s likely to back out of your deal, yet you’ll need to know you can stay in your home long enough to allow you to get through the loan and closing process on the new home.  Experienced real estate agents can help you navigate this delicate balancing act.

 

  1. Your house is under contract and you can’t find a house you like.
    The reality is you may have to adjust your expectations.  If you are unwilling to move into a temporary place until you find the right house to buy, you may have to compromise what you’re willing to accept in your next home.

 

  1. Your house is under contract, you’re making offers on other properties, but you’re losing out to other buyers.
    It’s a rare buyer who doesn’t want to “get a good deal,” but in a seller’s market, it’s important to recognize that getting the house you want IS getting a good deal.  That means being realistic about unlikely price reductions and keeping the offer as clean as possible.    If you were a seller and you had multiple offers on your home, which one would you pick?  Keep in mind, sellers want their price.  They want strong buyers who will have no problems closing on the house due to financing issues or the sale of their current home falling apart.  Finally, they want as little hassle as possible (i.e. buyers who will take the house the way it is.)

 

Situation 2:  Buyer’s Market where you live; Buyer’s Market where you’re moving

This is a half-good situation.  While you will need to be realistic when selling your house, you may be more likely to get the seller of your new home to accept a sale contingency and to be more flexible with closing dates and other terms of the contract.

 

What could go wrong and how to avoid that happening.

See 2 above; and to a lesser degree, 3.

 

Situation 3: Seller’s Market where you live; Seller’s Market where you’re moving

This, too, is a half-good situation.  You’ll get to call the shots when selling your home, but you’ll still face challenges on the purchasing end.

 

What could go wrong and how to avoid that happening.

  1. Your house sells quickly. To your advantage, you agree on a quick inspection/diligence period and lengthy closing date, but you can’t find an appropriate house to buy.
    The best ways to work this are to consider any, and possibly all, of the following:
  • Negotiate an even longer period before closing with your buyer. Of course, there’s no guarantee he’ll agree to that.  He may opt to walk away, depending on his needs and available options.  However, in a strong seller’s market, he may not have many options, so it doesn’t hurt to ask.
  • Ask your buyer’s agent to contact owners of homes similar to what you want and ask them if they would consider selling to you. Keep in mind, you will need to offer a price that would motivate people not currently thinking about selling to do so.
  • When the right home hits the market, don’t delay submitting an aggressive and clean offer. When negotiating the offer, keep your eye on the bigger picture and don’t let the deal slip away over minor details.

 

Situation 4: Seller’s Market where you live; Buyer’s Market where you’re moving

This is THE ideal situation.  You should have no problem negotiating terms favorable to you on both ends of this deal.  Still, you could face one possible problem…

  1. Greed breeding arrogance.
    By all means, take advantage of the leverage you have in this situation, but don’t be a jerk.  Some people can be pushed only so far, and then they will walk.  Sure, you will have an easy time lining up another buyer or seller, but remember your time and, more important, your reputation as a decent human being have value, too.

How do you know whether you’re in a sellers or buyers market?  Contact an experienced real estate professional.  In addition to valuable market information, a competent agent will help you navigate a smooth simultaneous sale and purchase.  Need help finding one?  See the box on the right side of this screen.