Many people find themselves in the situation of having to buy a new home and sell their current one at the same time. Down payments on a new home require a lot of money which is why so many people are compelled to sell before they can buy. But so much can go wrong with this. If your buyer backs out, you can’t get your new home. If you sell but your new purchase falls through, then you can be left homeless. With so much at stake, it helps to be prepared and know what you’re getting yourself into. Thankfully, most advice about getting through this situation is pretty straightforward. Below are four key mistakes you need to avoid like the plague when buying and selling at the same time.
1.) Waiting too long to prep your home for selling
Before you can list your home, you’ll need to do a little work to get it ready for showing. The walls might need a new coat of paint. The cabinet doors might have to be replaced. Then there’s the unavoidable decluttering operation. This can take more time then you might think. The last thing you want to do is leave it all to the last minute. If your listing agent tells you to start prepping, then do it now. The sooner it’s ready to list the sooner you can find a buyer.
2.) Not having a backup plan
Buying and selling at the same time requires a lot of coordination. Keep in mind that it’s not all about you. The buyer agent has to work together and multiple families have to coordinate when they’ll move in and out of the homes. With so much that can go wrong, it can’t be stressed enough how important it is to have a backup plan. What will you do if there’s a timescale of a few weeks or even months between moving out and moving in? This is why it’s vital that you have a small reserve fund in store to cover a few weeks in a hotel or even a short-term rental. Make a list of all the things that can go wrong and have a contingency plan for what to do if the worst happens.
3.) Buying too big
First-time buyers have a habit of making the same mistake as those who are simultaneously buying and selling. They fail to get preapproved for a mortgage and buy too big. Then after agreeing to the deal they apply for a mortgage and are surprised to get rejected. It’s easy to get a bit carried away with yourself when home hunting. One way to control any impulse to buy a home beyond your budget is to know much you can afford. The only way you can fully know your limit is by getting pre-approved before you start home hunting. Don’t overlook this step. Getting preapproved has other advantages such as making your offer look much better to a seller since they know you can afford it.
4.) Not providing enough breathing space on your listing price
When you start listing your property for sale you should know what its fair market value is. But don’t expect that you’ll get exactly that. The market might slow down and force you to reduce your asking price. You could be stuck in protracted negotiations with a buyer that knows you need to move out by a certain date. This is exactly why you don’t want to buy a property that requires the entire proceeds of your sale for the down payment. Give yourself a little breathing space in your initial asking price and expect that you might have to lower that by a few percentage points.