Looking to sell and buy a house at the same time in Chicago Illinois? You are not alone! Lots of people are doing it to great success – you just need to know-how.
While there are many things that can go wrong, working with an experienced agent and team makes it a smooth and relatively stress-free experience.
In this blog post, we cover the entire process of buying and selling a home simultaneously in Chicago Illinois, the best practices used by those in the know, and what’s working well in today’s market. Let’s get started!
Can I sell my house and buy another one at the same time?
Many buyers and sellers carry out the two processes simultaneously. On average, 20% of homeowners make the two transactions together. There are a number of steps that need to be coordinated and this is complex to achieve in a chain.
There are several different strategies that you could use to accomplish this goal. You will need to talk with your agent about what the best approach would be for you. As a complicated process, each one should be approached on a case-by-case basis, but here are the basic steps you will need to take to buy and sell your house at the same time in Chicago, Illinois.
How to buy and sell your house at the same time
1. Find an agent who specializes in simultaneous buying/selling
Work with an experienced agent who can help you navigate the process. They will be able to give you specific advice and guidance on what needs to be done in order to sell your home and buy a new one simultaneously.
Many different factors could affect the success of your transaction. Your agent’s experience, the market conditions, and the time of year all contribute to your likelihood of success. Choosing the best help could be the most important of all.
2. List your current home first
Start by putting your current home on the market.
It’s critical to get everything in order before listing your property. When you’re looking to sell and purchase at the same time, a good offer from a strong qualified buyer is essential.
3. Start looking for your new home
It is important to have a firm idea of what you are looking for. As your current home is already listed, you don’t want to lose time figuring out what you want. Nail down as many variables as possible, including location, bedrooms, age, size, and price range.
3. Negotiate on both homes at the same time
You will need to negotiate the offers on both homes until an agreement is reached on price and terms. This can be tricky, as there are many moving parts involved. Your agent will be able to help you navigate this process and keep everything on track.
If you spot a property that interests you, you can place an offer on the condition that your house is sold. Often this is the most challenging negotiation. Keep in mind that having a sales contingency lowers the value of your offer. When compared to a non-sale contingency offer, a sales contingency offer would be very ineffective in our current market circumstances.
4. Be ready to close quickly
Once an agreement has been reached with both homes, it is time to close! Your agent will walk you through the closing process so that nothing gets missed or overlooked during this important step in your transaction.
The most common closing is a concurrent closing, this is often done by closing on one home in the morning and closing on the second only a few hours later.
What is a concurrent closing?
A concurrent closing is when you sell one property and then purchase another within a short time frame, usually on the same day. Exactly simultaneous closings are not technically feasible at the same time – you could compare it to twins being born. It’s part of one overall process, but it can’t physically happen at the same moment
In concurrent closings, the first closing must be completed before the next, thus there must be a minimum duration of at least a few hours (bare minimum) between them.
As you can see, selling and buying a house at the same time can be a lot of work. This is why most people choose to enlist the help of an agent to make the process as smooth as possible.
Let’s take a look now at some of the best practices that are being used in today’s market.
Best practices for selling/buying at the same time
Here are some of the best practices that we are currently seeing in today’s market:
- Get pre-approved for the new house before you list your current home for sale. This will ensure that if there is a multiple offer situation, you have an advantage over other buyers.
- Be aggressive with the listing price of your home. A reasonable listing price or receiving a strong quick offer and contract will be beneficial when submitting the offer on your new home.
- Look at homes prior to listing yours for sale so that when you do list it, you will already have an idea of what is available and at what price.
- Have a team that can make this process easy for you. A real estate agent with years of experience in buying and selling homes simultaneously is extremely helpful as well as having closing attorneys who understand the process and how to coordinate the closings so that they happen on the same day.
- Use the same attorney, agent, title company, and lender for both transitions. With many moving parts, the fewer people involved the less of a chance of miscommunication or mishaps.
What is working well in today’s market?
There are many things that are working well in today’s market when it comes to selling and buying a home at the same time. Here are the most notable:
We recommend all our simultaneous seller buyers have a strong written offer from a buyer for their home before viewing and submitting an offer on their new home. Here are the reasons why:
- Your offer will be more attractive to the seller of the new home if it is accompanied by a written sale contract of your current home.
- If you have a great strong offer on your current home, this can help in negotiations for the purchase of your new home.
- Be prepared to move quickly when you find the home you want to purchase. In some cases, multiple offers can be made on a property and the seller may choose the offer with the quickest closing date.
Once again, keep in mind that having a sales contingency lowers the value of your offer. When compared to a non-sale contingency offer, a sales contingency offer would be very ineffective.
Alternatives to Selling before Buying
If you are unable to sell your home before buying a new one, there are a number of options to explore, which include renting your home before buying, using a bridge loan or HELOC loan, getting a leaseback, or selling to an ibuyer.
Rent your home before buying:
If you are financially capable and qualify for two mortgages at the same time, one option is to lease your property before looking for your next home. After you are settled in and the lease has expired, you can then place your old home for sale. Leasing your first property would give you time to look for your next home and not have to deal with the strict constraints of concurrent closings.
FHA and VA loans, however, do not allow you to have two mortgages at the same time. Also, lenders prefer that your monthly mortgage and housing payment account for less than 43% of your gross income. If qualified, this is a great alternative to simultaneous closing. Contact your lender and/or your agent regarding your specific situation.
A bridge loan or HELOC loan:
This is a short-term loan that can be used until the proceeds from your home sale are available. If you have equity in your current house, you may use that money to pay for the down payment, closing costs, and unforeseen expenditures while still keeping both houses.
A bridge loan enables you to borrow money for a new property before selling your present home. Bridge loans typically come with higher interest rates than traditional mortgages and they often require high credit scores and low debt-to-income ratios.
Leaseback:
If you are unable to find another place to live, but your current house has sold, you could negotiate with the new buyer to lease or rent your old home back to you for a short period of time. This is often mostly done with investors or developers. Most traditional buyers want possession at closing. This option allows you time to buy without having to use a bridge loan or be in a huge rush to find another place.
Sell to an iBuyer:
An Instant Buyer is an organization that purchases houses from sellers who want to sell quickly and completely online. The iBuyer makes an offer to the seller within a few days of receiving a description of the property. It’s gaining popularity thanks to large corps and even traditional real estate companies offering this service.
Zillow has recently discontinued this service because it has already lost a lot of money with the few it has completed. It’s quite convenient to sell to an iBuyer, but like with everything else, there is a price. However, if you can find an iBuyer that makes financial sense, take advantage of it. Confirm that you’re receiving a fair price by consulting with a reputable real estate broker.
Pros and cons of selling and buying a home simultaneously
Here are some of the most notable:
Pros:
- You will not have two mortgages at the same time.
- You won’t need a place to stay while you find your new home
- One move instead of two
Cons:
- Selling and buying at once requires two closings, which means two sets of closing that must go exactly to plan. There is a higher risk that one or both transactions will fall through, so you need to be prepared for this possibility.
- Time restraints limit the time to find your new home
- Most people will need an agent to pull it off
Conclusion
What is the best option for you? It depends on your situation, financial ability, time constraints, and what makes sense to you. You should always consult with a reputable real estate broker/agent that knows all of your options and can assist you in making the best decision for your situation.
We’ve helped Illinois families buy and sell their homes in Chicagoland for over a decade – get in touch if you have any questions about buying and selling your home at the same time in Chicago.
