How do you sell and buy a house — at the same time?

For decades there have been no easy answers for homeowners who are trying to buy a new house while selling their old one. They've had to balance tradeoffs between selling before they buy, buying before they sell, or somehow doing both at the same time, which requires coordinating closing dates.

However, the rise in real estate tech companies, including power buyers, have provided a few solutions to help homeowner-buyers overcome this hurdle.

If you’re wondering how to buy and sell houses at the same time, we’ve broken down your options and the pros and cons of each.

1. Sell your house before buying

The traditional way to sell your home and buy a new one is to do just that, in that order. Homeowners start by finding a real estate agent to list their home, and once it sells, they work with a buying agent to go house hunting for their next one.

It’s a straightforward process with an intuitive flow. Since you’ve sold your house first, that means you have the proceeds on hand when the time comes to put an offer on the next house.

However, the time between move-out date and move-in dates can be long and unpredictable — and the costs of temporary housing and moving expenses can add up, sometimes taking a considerable chunk out of the sellers’ proceeds.

→ Learn how long it takes to sell a house

Advantages

• Cash on hand: After you sell your house, the equity you built in your home will go into your bank account and can be used towards your next home purchase.
• One mortgage at a time: One transaction is completed before the other, so you don’t have overlapping mortgage payments or additional loans.
• Easier to qualify for a mortgage: Securing better interest rates and terms on a new mortgage is easier without the debt of the mortgage on your former house and with the cash from your home sale in your pocket.

Disadvantages

• Accommodating showings: When you sell your house before buying another, you’ll still be living in it when it’s on the market. That means leaving for showings and open houses while still living your life, keeping a tidy home, and also preparing to move. This can be stressful, especially for families with children.
• Housing insecurity: There are no guarantees that you’ll find a new home before your move-out date, or that it will align with the move-in date for your new home. This can make you and your family reliant on temporary housing without a clear end date.
• Two moves: Moving ranks consistently as one of the most stressful events a person can go through. When you sell before you buy, you’re signing on to moving (at least) twice in a short period. This can cost you a lot of stress and moving costs.
• Potential storage costs: If you can’t fit all of your belongings into your temporary digs, you may have to add storage costs to your rent.
  

Looking to sell your home? Orchard can help. We'll even recommend improvements to help sell your home for top-dollar. Start here.

2. Buy a house before selling

Buying before you sell can solve the issue of not having a place to live if you sell first. 

In this case, the homeowner works with an agent to find their next house, put in an offer, and secure it. Many people make their offer on the new home contingent on the sale of their old one to help line up their moving timelines. Once they close on their new home, they’ll work with an agent to list and sell their former home.

However, to buy a new house before selling your old one, you’ll need the resources. Here are a few of the factors you’ll need to consider:

• Do you have enough cash, without the proceeds from your home sale, to make a down payment on your new home? Can you cover closing costs?
• If you haven’t paid off your mortgage and plan to get one or your new home, are you financially healthy enough to qualify for it?
• Can you make two mortgage payments while you wait for your old house to sell?

→ Learn how long it takes to buy a house

Advantages

• No rush to buy a new home: Buying a new home from the comfort of your current one can relieve the pressure of having to find a home fast. You can take your time to find the right home instead of settling for the right now house.
• Move into your new home right away: No stop-gap housing, no living out of a suitcase. You can move straight into your new home from your current one when you buy before you sell.
• No additional expenses from renting or moving twice: Not only will you reduce the stress of finding temporary housing and moving twice, you’ll also save money by avoiding these costs entirely.

Disadvantages

• No cash on hand: Homeowners with significant equity in their home may be able to access some of it through bridge financing, but they’ll also pay the additional price of interest and closing costs on those loans.
• Harder to qualify for another mortgage: Your current mortgage will count against you in your debt-to-income ratio, an important metric for lenders when determining the financial health of borrowers. A high DTI can make it difficult, or even impossible, to qualify for a new mortgage.
• Losing out with a non-competitive offer: In a seller's market, homeowners can be less willing to accept a contingent one that comes with strings attached.
• Balance two mortgages or multiple loans at once: You may have to pay two mortgages while you wait for your old home to sell, and if it takes longer than expected, you may grossly overspend on your housing costs.
• Financial stress: The stress of applying for a mortgage while having one, balancing multiple mortgage payments, moving costs, and all of the other expenses can add significant stress to your homebuying and selling process.

→ Learn more about buying a home before selling in our in-depth guide

3. Buy and sell houses at the same time

Ideally you'd be able to sell your house and buy a new one on a seamless timeline. Imagine that you listed your home the same day you started your home search. You accepted an offer on your house, and your offer on your dream home was accepted within hours of each other. Closing lined up perfectly — your home sale closed the day before your home purchase did — allowing you to use all of the proceeds towards your new house. And the best part? Your closing dates fell aligned, so you only had to move once.

In this scenario, you didn’t need to worry about finding temporary housing and storage, securing additional financing, or shouldering two (or more) mortgage payments at once. You were able to focus on the things that mattered, like saying goodbye to your former home and settling into your new one.

Unfortunately, selling and buying a house simultaneously is extremely difficult —  there are too many obstacles (contingencies, negotiations, and lender hold-ups) that can hinder two real estate transactions from lining up perfectly. 

Other ways to buy another house when you already own one

If you need to buy and sell at the same time, there are a few ways to make it work for you. You can try to extend the closing date to make sure you have extra time to find a buyer for the old home or find your new home.

If you’re unable to find a new place in time though, you might consider a rent-back agreement. Negotiate with whoever buys the old house to allow you to continue living there for a set amount of time. 

If you are having trouble with your home sale, you can always rent out your old house to recoup expenses, or sell to an investor or iBuyer. Keep in mind that when you sell to an investor, you may not get as much as you would if you sold your home on the market.

Another way is to work with Orchard. We can help you line up closing dates to sell and buy at the same time, integrating these transactions into one seamless process.

Here’s how we do it:

• Get a guaranteed offer: Don’t worry about your home sitting on the market — we’ll list your house and if it doesn’t sell in 120 days, we’ll buy it from you at a predetermined price. Our guarantee allows you to focus on finding your dream home on your timeline.
• Make a non-contingent offer: By guaranteeing the sale of your old home, we’ll help you make a non-contingent offer on your new home. We can even turn you into a cash buyer and help you stand out in a competitive market.
• Skip the showings and move once: Don’t worry about decluttering, depersonalizing, and keeping your house ready for prospective buyers. We list your home after you've moved into your new place.‍
• Sell for top dollar: Before we put your home on the market, we can prep and make upgrades, which can save you money by helping your house sell for maximum value.

Ready to buy and sell? Get started with a free home valuation — our estimates are 30% more accurate than the rest.

Can I own two homes at the same time?

You can own multiple homes simultaneously so long as you have the means to afford them. For most people, it can be difficult to buy another house or second property when they already own one and haven’t yet paid off the mortgage. 

How do I buy another house if I have a mortgage?

Qualifying for a mortgage before selling your home can be difficult, since lenders will look to hold you to the same financial requirements when you took out the first mortgage, and you may have a higher debt-to-income ratio. You can try taking out a HELOC or home equity loan to close on the new home, or work with a company like Orchard. We’ll give you an interest free loan to cover the costs of your new home while we sell the old one.

Is it better to sell your house before buying another?

Whether you should sell your old home first or not depends on your financial situation and personal circumstances. Selling before buying can pose a great inconvenience, but it may be necessary if they aren’t able to buy first, or coordinate closing dates, or work with a power buyer that services your area.