SIMULTANEOUS HOME CLOSING: SAME TIME BUY & SELL
Navigating the buy-sell balancing act can be more than just stressful, it can be down right daunting. After all, it’s a complex situation. The challenge? Selling your home at a great great price, while securing a sweet deal on the one you will buy to replace it. All the while you must manage the timing of the two transactions to ensure they’ll be ready to close on the same day. Although the thought of it may seem overwhelming, a simultaneous home closing is entirely achievable with the right strategy and the assistance of a good agent!
Selling Your Home: A Guide to Simultaneous Home Closing
Selling your home while buying a new one can be an exhilarating but daunting process. The concept of a simultaneous home closing—one where both transactions conclude on the same day—can simplify your transition from one home to another, but it requires careful planning and execution. Here’s what you need to know to navigate this complex maneuver.
Understanding The Simultaneous Closing
A simultaneous closing is a process wherein the sale of your current home and the purchase of your new home close on the same day. The goal is to enable you to use the proceeds from the sale of your old property to fund the cash required to close on the new one. While this approach has many advantages, you must carefully plan each step of the process to ensure that ensured that both transactions are ready to close on the appointed date. Additionally, you would be wise consider contingencies that will enable your transactions to close at a later date should a simultaneous closing become impossible.
Benefits of a Simultaneous Home Closing
- Streamlined Process: Having both transactions close at once reduces logistical challenges associated with moving between two homes.
- Financial Efficiency: You can immediately leverage equity from your current home towards your new purchase, thereby smoothly transitioning from your sale to your purchase..
- Reduced Stress: Consolidating everything in one day minimizes uncertainty; you won’t have to deal with temporary housing, overlapping mortgages, or doubt as to whether you will find a home you’ll love, within your budget, in your desired community.
Preparing for a Simultaneous Home Closing
Here are some steps you must take to ensure your simultaneous closing will be smooth and low stress:
1. Get Pre-Approved for Financing Before You Go House Hunting
Before listing your home or making an offer on a new one, investigate the financing options available for the purchase your new home. Then, once you’ve chosen the mortgage that is right for you, get pre approved. This will give you clarity as to your budget constraints and strengthen your negotiating position when the time comes to submit an offer.
2. List Your Home Strategically
Work with an experienced real estate agent who understands simultaneous closings well:
- Set a competitive price based on a comparative market analysis.
- Stage and prepare your house to attract buyers.
Timing is crucial; Don’t procrastinate in preparing you home to make a great first impression. Then be sure to price your home competitively to make certain it will not languish on the market.
3. Begin House Hunting Early
Start searching for your dream home early in the process. Do it before officially listing yours. Although you may not want to make an offer until your home goes under contract, be prepared to begin making offers when your home does:
- Identify neighborhoods that suit your lifestyle.
- Attend open houses or virtual tours frequently and keep track of listings that catch your interest.
Navigating Offers and Negotiations
Once you’ve received an offer on your home and negotiations begin, be sure to make terms that will enhance your ability to close simultaneously a priority. Then, when your home is under contract, begin submitting offers and negotiating terms to your liking on a purchase. Then, having contracts in hand on both sides of this transaction, it will be time to coordinate your simultaneous home closing:
1. Coordinate Closings with Both Parties & Their Agents
Effective communication among all parties involved—including the buyers’ and sellers’ agents—is vital at this stage:
- Ensure timelines align properly so that funds flowing from selling directly and immediately contribute toward purchasing.
Your agent will assist by managing necessary paperwork, thereby ensuring no misalignment occurs during escrow processes! The details needed to protect your interests and achieve your goals must be spelled out in detail and with care.
2. Be Prepared to Monitor & Deal With Contractual Contingencies
Contingencies are common in real estate deals, so be sure that the timelines for resolving them, for example, completing inspections and obtaining a financing commitment, are inline with your closing date! Build flexibility into agreements where possible so unexpected circumstances don’t derail your plans! But also understand that issues do arise. So be prepared for them and don’t stress. Your Realtor is an experienced problem solver. He or she will discuss issues with you and coordinate solutions designed too create a win/win situation for all concerned.
Finalizing Transactions
On closing day::
1) Bring essential documents, such as proof of ID & mortgage-related papers, with you!
2) At the closing, execute required documentation under guidance of title company professionals!
After a successful closing, celebrate the final handover of keys, symbolic of an end to an old way of life and new beginnings!
But what if issues arise that prevent the closings from being simultaneous?
Engaging in simultaneous closings can transform what might feel like chaos into organized success if planned methodically! By preparing ahead and having a contingency or two in place, you can remain confident, while avoiding stress and disappointment, if the timing of the closings is thrown off a bit.
Here are a few ways to make selling and buying work for you and your family, even if one or more of the closings are delayed:
1. A BRIDGE LOAN
This loan acts as a temporary solution if you are ready to close on your new home, but the closing on your old home is delayed. It allows you to borrow against your current home’s equity to fund the cash required to close on your new home.
Don’t want to move twice? A bridge loan will give you the flexibility to buy your new home now, and complete the sale of your old home at a later date. However, you must be able to qualify to hold your existing mortgage, the new mortgage, and the bridge loan. Therefore, only financially very strong individuals will be able to avail themselves of this option.
2. A LEASEBACK
If a simultaneous closing is not an option because you haven’t yet contracted to buy a new home, and the closing on your old home is around the corner, consider negotiating a leaseback. This short term lease agreement will allow you to sell your home, then rent it back from the new owner temporarily. Doing so will give you time to find and close on your next home. It will also strengthen you negotiating position when you do find your next home, because you won’t have to make your offer contingent on the sale of your previous home.
You would then become the renter of your own home when your sale settles. You may lease it back for a period of 30-60 days, or even longer. If such an agreement were acceptable to your buyer, it would give you some flexibility as you search for your dream home.
Why you would negotiate a leaseback when selling your home? Because you may prefer not to have to move twice, but have to sell to buy?
But what would you do if things were reversed? What if, as is the case in the earlier discussion of the simultaneous closing, you stood ready to buy your new home, but the closing on your old home was delayed? You could then try to negotiate a purchase and leaseback to your seller, or a postponement of the closing date for the purchase of your new home. Your seller may be willing to cooperate to avoid his sale falling apart.
3. A HELOC OR HOME EQUITY LOAN
A home equity loan or line of credit (HELOC) lets you access the equity in your current home to help with the down payment or other costs associated with buying a new home.
When would you use it?: At closing, to fund your downpayment and closing costs on your new home. You would that pay the equity loan off at closing when your current house sells. However, as with a bridge loan, you would have to qualify to hold your existing mortgage, the new mortgage, and your home equity loan.
4. BUY WITH A HOME SALE CONTINGENCY
Of Course, this option alleviates some of the complexities of buying and selling simultaneously. However, sellers typically prefer not to accept a contract that includes a home sale contingency. This is because they prefer not to take their home off the market if there is a significant risk that their sale won’t close. But this contingency is not uncommon, and as your agent, I would never let you put your earnest money deposit at risk but signing a contract to buy a home without such a contingency.
Of course there is one exception, if you are financially strong enough that you can easily close on the purchase, even if the sale of your home fails to close.
But how difficult is it to get the timing right? Are simultaneous closing even worth trying? The answer is that they are more common than you’d think. I have represented clients in two of them in the last year or so.
The first was a couple from Tennessee who wanted to relocate to Ocala. A problem arose when the Ocala closing agent requested that the funds needed to close on the Ocala home be in the title company’s escrow account twenty four hours before closing. When I talked to my client, I quickly sensed that something was wrong and drew this news out of him. Then I gently pointed out to both my clients and the title agent that the contract was carefully written and spelled out all the details of the simultaneous home closing.
I pointed both to paragraphs in the contract that stipulated when the funds would be available and when they would be wired to the title company. The title agent then withdrew her request and was to a joy to deal with the rest of the way. As a result, the simultaneous home closing was completed on time and to the delight of all concerned.
The second was a couple from Parkland, Florida who also were relocating. However, in this case we were ten days before the closing on the Parkland home and the sellers still hadn’t submitted an offer on any of the dozens of homes my partner and I had shown them. So I did a little research and found them a home they fell in love with, negotiated a ten day closing on an all cash deal, and closed on both homes simultaneously. Problem solving is not always possible, but as these two transactions show, it is possible more often than not!
Considering a move and wondering how to make it work? Reach out! I can help you plan a course of action that will make you happy!
Andrew Kruglanski, MBA, ABD, ABR, Certified Home Seller Representative, Broker
Ocala Home Guide Realty
(352)234-3048
andy.k@ocalahomes.online