What Happens When You Sell Your House Before You Buy a New One?
Selling a home and buying a home at the same time requires some pretty delicate timing. You and the buyer both have your own schedule and things rarely ever work out perfectly for both of you.
So, it pays to have a backup plan because being flexible can be the difference between closing the deal and losing out. Here are some of your options.
Stay with family or friends
On the upside, this option can end up saving you money since you're probably staying for free or cheap.
The downside is living in someone else's space is never easy—and that's doubly true if you throw kids or pets into the mix.
Emotions are already running high during the moving process, so you want to make sure you focus on maintaining a good relationship with whoever you're staying with.
Pro-tip: Make sure you set clear expectations for how this is going to go. Will you be paying a portion of the utilities or any rent money? Are there certain rules about guests or the use of certain rooms in the house? Is there a date that you absolutely have to be out by? Bonus points for getting it in writing.
If you don't have any place you can stay for free—or cheap—you always have the option to rent. When you look for a rental, don't think about it as a place you'll live in for a long time.
You won't need the four bedrooms, backyard, and square footage you have on your "musts" list for your home. Instead, you could probably get by with just an apartment while you keep most of your stuff in a storage unit.
Remember, it's only for a short amount of time, so don't worry about having all your creature comforts.
Pro-tip: Look for places that offer short-term rentals or ones that allow you to break your lease at any time. Otherwise, you might be on the hook for mortgage and rent if you can't find someone to sublet.
Rent-back from the buyer
If you're confident you can find—and close on—a new home in a set amount of time, you can ask if your buyer is willing to let you rent-back from them.
Also known as a post-settlement occupancy agreement, a rent-back agreement allows you to stay in your house for an agreed-upon amount of time after you sell it. You'll pay rent and a security deposit to the new owners. Your rent will cover the new owner's mortgage, insurance, and taxes for the time you're there.
Just keep in mind that the amount might be more than you're used to paying, depending on how much the new owners put down and what kind of interest rate they got.
Before you ask the new owners for a rent-back agreement, make sure you talk to your real estate agent to figure out what you want to ask for.
It might be that you pay a daily rate so that you're not stuck paying for the full month, or maybe you pay for the month but negotiate a lower rate if you help make the place move-in ready by having it painted.
No matter what you end up negotiating, make sure you get it in writing so that everyone is clear about what is going to happen.
Pro-tip: Even if you have a new house lined up, it might be useful to rent back from the buyer for a week or so. That way you can paint your new house and move at a slower pace. Otherwise, you'll need to pack up the moving van before closing and then move everything into your new house after the closing. That makes for a pretty long day!
Worrying about where you're going to live can be pretty stressful. Our advice? Focus on the positive: you sold your house! Try not to rush into things and take your time to find the right house.