Have you been happy for years in a house that you bought with your first savings? If so, you probably haven’t spoken the word “moving” for a long time. However, imagine that suddenly you spot the house of your dreams accompanied by a poster “for sale”. What should you do in such a situation?
Suddenly, everything seems to go very fast: you negotiate the price, compare the rates, and sell your current house. Many things need to be done to complete such a transaction, but you don’t know where to start. All these obstacles will, however, lead to your real estate dream come true; but in these difficult economic times, this dream can quickly turn into a nightmare. In this article, you will learn how to approach buying and selling a property at the same time.
Where to start?
The problem is obvious: you’ll only be able to buy a new house after receiving the money from the sale of your current one. However, many people don’t want to sell a house until they are certain that the new house will belong to them. It’s perfectly reasonable that you want to move to the new house as quickly as possible, but if the payment situation is not completed, you’ll have to wait. Thus, you find yourself homeless since your current home has already been sold.
What happens if you sell your current house first?
You will probably think: I Sold My House, but what should I do next?
Well…by selling your house, you will have good financial capital right away. However, you won’t have the place to live until the new house is vacated. Building a new home is often synonymous with delays, so can end up homeless longer than you think. If so, possible solutions are:
- Staying in your old house and negotiate with the new owner a lease for the duration of the unavailability of your new property
- Looking for a place to rent: apartment, hotel, friends or family
None of these options are ideal, and certainly not if you have to move all your assets over and over again, but they are financially the safest options.
What happens if you buy your new home first?
Such a move is a quite risky bet. If you don’t have enough capital, you will need to borrow a certain amount of money until your current home is sold. The banks often propose special bridging schemes for this purpose. But if this temporary situation will last longer than you thought, you will have to continue to pay two loans (if the bank accepts it), which will significantly complicate your life.
With the current economic crisis, it is difficult to know how the real estate market will evolve. You may receive less than you expected for your home. In addition, a sale that lasts a long time weakens your trading position, which leads you to sell well below the posted price. The financial hole will only get bigger in this way and in the worst case you will lose both houses.
However, if the whole process goes positively, you will have enough capital to buy your new home without being homeless or without a forced sale of your old house. Although, you should remember that the reality is often very different. If your plan fails, you will have to seek help. The best option is to analyse your current situation with a professional adviser before undertaking any action.
If you have a good and trusted relationship with your bank, and the bank knows that you are an excellent long-term customer, you will be able to trade on short-term loans. Banks have experience in this kind of situations, so you have to ask them for understanding.
As you can see, selling and buying a house at the same time can be a difficult task to complete. However, you should carefully examine all your options, calculate the possible risk, and find the best solution to fulfil your dream of a new house.