Buy And Sell Your Home At The Same Time: A Guide

Are you considering selling and buying a home at the same time? It can be a hassle even for an experienced homeowner who wants to buy and sell simultaneously. Most homeowners can’t afford two monthly mortgage payments, so people typically sell their current home before they finalize the purchase of a new one.

If you’re buying and selling at the same time, it puts you at a disadvantage. In a hot real estate market, many sellers won’t wait for you to sell your home before they sell their own home. They’re more likely to accept an offer from a buyer who is approved for mortgage financing and is ready to move.

Depending on your finances, you may need to sell your home first to cover closing costs and a down payment for your new home. Trying to buy and sell simultaneously might mean carrying two mortgages or getting stuck with no place to stay if your home purchase falls through.

Fortunately, there are steps you can take to reduce the stress of selling and buying a home at the same time. Having a plan is key to a smooth transition to a new house.

How To Sell Your Home And Buy A New One

Just because buying and selling at the same time can be difficult, doesn’t mean it’s impossible. Follow these simple steps to boost your odds of success.

1. Research Your Current And Prospective Market

Work with your real estate agent to learn as much as you can about the market where you are selling your home as well as the neighborhood where you want to buy a home. Pay close attention to nearby sales prices. This will help you determine your home’s value, as well as the market value of homes in your new neighborhood.

It's important to research the average number of days it takes for homes to sell in each neighborhood. Then you can approximate the timeline you have to sell your property before you close on the mortgage to buy your new home.

2. Review Your Finances

Studying your finances is a key step in buying and selling at the same time. Do you already have enough cash saved for a down payment on a new house? Do you have enough savings to cover the closing costs on your next home purchase?

If you’re on firm financial ground, you might be able to buy a new house before you close the sale on your current one. If not, or if you can't handle two mortgage payments in the same month, you might need to sell your house and close that sale before you buy your new home.

One option is to delay selling in order to build up a cash reserve to cover your buying costs. Or you can consider financing that will allow you to buy and sell your home at the same time. 

3. Consider All Available Financing Options

If you’re like most buyers, you’ll need a mortgage to finance the purchase of your new home even if you sell your current residence before buying your new property.

If you can’t sell your current home before buying a new one, you might not have the funds necessary to cover your closing costs and down payment for that new residence.

Fortunately, there are options you can turn to for financial relief when you’re buying and selling at the same time.

Bridge Loans

Some homeowners take out a bridge loan to help keep them afloat until their current house is sold. A bridge loan is a short-term loan that, as its name suggests, is designed to bridge the gap between buying your new home and selling your current one.

This type of loan provides funds for the down payment on your new home and the closing costs that come with buying. You usually aren’t required to make payments on this type of loan immediately. If timed correctly, your payments won’t start until after you sell your current home. Then, you can use the proceeds from the sale of your current home to pay off your bridge loan.

Rocket Mortgage^® doesn’t offer bridge loans at this time.

Home Equity Line Of Credit (HELOC)

Another option is to apply for a home equity line of credit (HELOC). A HELOC allows you to take out a line of credit to get cash quickly while using the value of your home as collateral for the loan. You can use the HELOC funds as a down payment on the new home and plan to repay it with the proceeds from your home sale. Rocket Mortgage doesn’t offer HELOCs.

Low Down Payment Mortgages

If producing the funds for a big down payment is your biggest challenge, you can always search for a mortgage loan that requires a smaller one.

Fortunately, there are several options you might consider for mortgages with low to no down payments, including:

• FHA Loans: If you have a FICO^® Score of 580 or higher, you could qualify for an FHA loan that requires a minimum down payment of just 3.5% of your new home’s final purchase price.
• VA Loans: If you are a veteran, eligible active duty member, reservist, National Guard personnel or a qualifying surviving spouse, you might qualify for a VA loan that requires no down payment at all.
• USDA Loans: Available in rural areas across the country, USDA loans can also offer a zero-down option for buyers.
• Conventional loans: Conventional loans are those not backed by a federal government agency. Depending on the situation, you might even qualify for a conventional mortgage loan that requires a down payment as low as 3% of your home’s purchase price.

It’s a misconception that you always need to pay 20% down on a home. Keep these options in mind when evaluating your loan options. Everyone is different, so you’ll need to assess if one of these loan types is right for your situation.

401(k) loans

You might be able to borrow funds from your 401(k) plan to cover the costs associated with buying a home, including down payments. If your 401(k) plan allows this – and not all do – you won’t face any penalties, but you will have to repay what you borrowed with interest.

The big downside is that this money is supposed to be used for your retirement years. By borrowing from it, you are reducing the amount of money you would otherwise have saved for your after-work years. For example, it can interrupt contributions from your employer for the length of the loan. Because of this, borrowing from your 401(k) should be a last resort.

4. Consult A Trusted Local Real Estate Agent Or REALTOR^®

Working with a local real estate agent can remove much of the stress when you are trying to buy and sell a home. An experienced real estate agent can help prepare your current home for sale and find potential buyers for it while also showing you new homes in your desired location. Real estate agents can also help you find temporary housing between your moves, if needed.

Your real estate agent will help you with a marketing plan for your home and will make suggestions on how to stage your home for open houses so it looks enticing to buyers. If you’re buying and selling a home, working with a local real estate professional will boost the odds that your current home sells as quickly as possible.

If you’re looking for a real estate agent, our friends at Rocket Homes^℠ can match you with one of the Verified Partner Agents in your area who’s aligned on your goals.^1,2

5. Start Shopping For Your New Home

You can shop for your new home while you’re trying to sell your current one. This includes working with a real estate agent who can find homes within your budget in the neighborhoods you’re considering.

Just be aware that you might find a new home before closing the sale of your current one. That could lead to financial stress. If you don’t look for a new home while selling your current residence, you might also miss out on a property that is the perfect fit for you. You’ll need to weigh the pros and cons of buying and selling at the same time to determine the right move for you.

6. Be Aware Of The Risks Of A Contingent Offer

A common approach to buying under these circumstances is to make a contingent offer while trying to sell your current residence. Typically, your offer will state that you can’t close on the new home until your old home sells. This type of contingent offer is a tool that buyers use when they want to minimize their financial risk in case they struggle to sell their current home.

With a contingent offer, you don’t have to produce a down payment or closing costs until your current home sells and you won’t need to worry about getting stuck with two mortgages.

The drawback of making a contingent offer is that the seller can reject it or make a counteroffer that negates the contingency. Your contingent offer could also get passed over for an offer without one, which is especially common in a seller’s market. In a hot real estate market, homeowners will receive plenty of offers that come with no contingencies. So sellers are less motivated to accept a contingent offer that could fall through.

If you’re attempting to buy a new home before your house is sold, it’s vital that you weigh the odds that a contingent offer will succeed. Consult your real estate agent on the best way to go about this process.

7. Have A Backup Plan If Your New Home Purchase Falls Through

Even if you do your best to time your buying and selling processes perfectly, there’s always the chance that the purchase of your new home will fall through or be postponed. If this happens, you might be left without a place to stay for a few weeks or months. While this is annoying, a purchase falling through should be an inconvenience rather than a crisis.

With proper planning, you might already have created a contingency plan. If not, you have several options.

Short-Term Lodging

Short-term rental sites such as Airbnb have made the home transition process easier. If your purchase falls through, you might be able to rent an Airbnb or Vrbo in the area that fits your budget. These short-term rentals typically provide discounts for stays of more than 30 days and can help you move into your new neighborhood, even if you can’t move into your new home. Your real estate agent may also be able to help if you’re anticipating a housing gap.

Short-Term Storage

You can usually find short-term storage options with major national storage chains. If your things are already boxed up and move-in ready, you can put them in storage for a few weeks while you work out your housing situation.

Buy A Different Home

If the purchase fell through completely rather than being postponed, it might be time to restart your purchase process. Your REALTOR^® can help expedite your next purchase. Your agent will already know what you’re looking for, your budget and more. This agent will also have a pulse on similar homes in the market and will be able to set you up with showings ASAP.

Stay With Friends And Family

If you’re staying local or moving to an area where you know people, you might be able to crash with friends or family until you purchase a new home. While it can be difficult to share space with other people, this might be the most natural transition to a new neighborhood. This is easier for single people or couples rather than families, but it’s an economical option to help you get settled while relocating.

Keep in mind that losing out on a home purchase might turn out to be financially advantageous. Instead of carrying two mortgages, you might find yourself with none. This will help you afford your temporary lodging and save for your down payment.

Pros And Cons Of Buying A Home While Selling Your Current House

As with any real estate decision, buying a home while trying to sell your current residence comes with both challenges and benefits. Let’s take a look at the pros and cons of each situation.

Pros Of Selling Before Buying A Home

If you sell your current home before buying a new one, you’ll gain a financial advantage. You can use the funds from your home sale to cover the down payment and closing costs of buying a new residence. You also won’t face the financial strain of making mortgage payments on your new home and – if you can’t sell it quickly enough – your current residence.

Cons Of Selling Before Buying A Home

If you sell your current home before buying a new one, you might find yourself without a permanent home as you search for a new residence that fits your needs. This means you might have to pay for a temporary living arrangement, such as renting out an apartment or single-family home until you move into a new permanent home. You might also have to absorb the costs of moving twice.

Pros Of Buying Before Your House Sells

If you buy a new home before selling your current residence, you’ll know that you have a place to move when your current home sells. Buying before you sell also means that you can give your full attention to finding a new home that best suits your needs. You won’t feel as much pressure to buy quickly.

Cons Of Buying Before Your House Sells

The biggest disadvantages of buying a home before your current one sells are financial. First, you might end up with two monthly mortgage payments at one time. So, you’ll need to make sure you have the proper financing in place. You also won’t be able to tap into the proceeds from selling your home to cover the costs of buying a new residence.

The Bottom Line: Make A Plan Before You Buy And Sell A Home

The key to easing the stress of buying and selling a home at the same time is to develop a home buying and selling plan. That means researching the housing markets, making a financial plan, working with an experienced local real estate professional and – if all else fails – having a backup plan.

Whatever plan you develop, buying and financing your home doesn’t need to be stressful. Take the next step and start the mortgage approval process today. You can also give our Home Loan Experts a call at (888) 452-0335.

¹ Rocket Mortgage, LLC and Rocket Homes Real Estate LLC, are separate operating subsidiaries of Rocket Companies, Inc. (NYSE: RKT). Each company is a separate legal entity operated and managed through its own management and governance structure as required by its state of incorporation and applicable legal and regulatory requirements.

² Rocket Homes^® is a registered trademark licensed to Rocket Homes Real Estate LLC. The Rocket Homes^SM Logo is a service mark licensed to Rocket Homes Real Estate LLC. Rocket Homes Real Estate LLC fully supports the principles of the Fair Housing Act. For Rocket Homes Real Estate LLC license numbers, visit  RocketHomes.com/license-numbers. California DRE #01804478. Hawaii License # RB-23371. TREC: Information about brokerage services, Consumer protection notice.