5 Smart Strategies for Successfully Selling and Buying a Home at the Same Time

You’re downsizing, upsizing, or are in need of a change of scenery. Your house was perfect for you years ago, and now it’s time to find something that’s a better fit. Unfortunately, with all the hoops to jump through when dealing with a real estate transaction, you’re now wondering how to buy a house while selling the old one without being overwhelmed.

Selling and buying a home at the same time can be stressful, no matter the circumstances. But if you need to do both simultaneously, it can escalate from “stressful” to an extremely frazzling experience. You want the best offer for your current home while ensuring you have enough of a down payment for your new home. All the while, the timelines need to match up so you’re not left without a roof over your head.

Sound nerve-wracking? That’s okay! We’ve crafted an end-to-end guide on how to balance selling and buying a home at the same time. So, instead of ripping your hair out while going through two transactions, you can set yourself up for success and have your bags packed for your new home in no time.

Research How To Balance Selling And Buying A Home At The Same Time

Before you even consider the best way to sell and buy a home at the same time, talk to a real estate agent who can break down all of your options.

Your agent is trained to give you advice on the pros and cons of buying and selling a home simultaneously. They can also give you a sense of what your house could list for right now and how fast it’s likely to sell. They’ll gauge your timeline and build a step-by-step process that makes the most sense for you.

But if you’re a night owl and pondering what steps to take, your agent might not be around to answer your burning questions immediately. But you can get 24/7 real estate advice from Valery’s AI bot – Val.

It’s like a real estate agent in your pocket. We trained our AI chatbot with thousands of key data points from local listings and sold data to give you the most accurate real estate info as possible.

Factors Agents Consider as They Walk You Through the First Few Steps

Your current financial situation: One of the biggest hurdles you will face is coming up with a down payment for your new home while your equity is tied up in your current house. Your agent will ask how much you have available to put down if you were to buy a home today. They’ll also provide you with options, such as a bridge loan or home equity line of credit, to assist in your sale if needed. The following points are imperative to keep in mind when selling and buying a home at the same time. 

Your current house’s condition: This ties into how fast your home will possibly sell for in the current market and any issues you might encounter as you put it up for sale.

Your timeline: Do you have any flexibility around moving and closing dates? Do you have a limited amount of time to complete both sales? Your agent will consider these questions. There will likely be some overlap between sales, so preparing an easy-to-follow timeline will make things a bit less stressful.

Your home equity: This ties back to your current financial situation, but it will give your agent more information to help you decide if you should sell first or buy. If you sell your home first, your equity can assist in a down payment for your new property.

Timing For Home Sale And Purchase (If There’re No Hiccups)

Get your home ready for sale (4 to 6 weeks): Your agent will help you price your listing and assist in staging your home if needed. This is the time where you take a look at your home’s condition to see if there are any potential issues.

Shop for a new home (8 weeks): Once you stop endlessly scrolling on listing websites and have explored the market, you will have found your ideal home. This is the time to create the perfect offer. Your agent could suggest adding a sale contingency – your purchase is dependent on you selling your current home first. If your offer is accepted, your agent may also recommend a longer closing time, so you’re able to sell your home and use your equity for the down payment if possible.

List your house for sale: This is the stage where your agent puts in a ton of grunt work to market your property. They should have photographers and videographers to shoot and film your house. Those pieces of content are then uploaded on to listing websites, social media, and paid advertising.

Accept an offer (6 weeks): As of September 2024, the national average days on market was approximately 43 days, indicating that homes typically took about six weeks to sell. However, the average duration for a property listing to go under contract in Canada varies by region and market conditions.

Get to the closing table (4 to 6 weeks): This is most likely where you will see some overlap between selling and buying your home. As you finalize the sale of your property with a home inspection, appraisal, and all other necessary steps, you will most likely be doing the same for your new home.

Close on your new home (4 to 8 weeks): The exact timeline for your closing will vary, depending on your contingencies and any delays with financing. Ideally, you are hoping to close on your new home at roughly the same time as your current home, so your moving van can go straight from your old home to your new one.

Selling First Or Buy First?

The first approach to selling and buying a home at the same time is simply purchasing a new house before letting go of your old home. This could relieve some moving stress – instead of finding temporary housing or paying for a short-term rental, you can stay in your current home and move at your own pace.

But the danger is that you will be responsible for paying two mortgages and stretching out your finances might not be a situation you want to be in. Although, no need to worry too much, there are some options available to you for selling and buying a home at the same time.

Option 1: Contingency Offer On Home Sale

A contingency offer on a home sale in Ontario is an offer that includes conditions that must be met before the sale can close. A contingency in your offer states that if your current home doesn’t sell by a certain date, you can back out of the purchase contract without penalties. While this option could alleviate some stress, some sellers do not prefer a sales contingency because it puts the sale of their home at risk. However, some sellers may consider the offer.

Option 2: Use Bridge Financing When Selling And Buying A Home

A bridge loan is one of the ways to finance a new house while selling your current one. It
is a temporary loan option to help assist homeowners “bridge” the gap between the time their current dwelling is sold and their new home is purchased. Sometimes the timing of home sale and purchase do not align. In that case, the money they need from their current home’s equity isn’t quite available yet. That’s where a bridge loan comes in.

A bridge loan is a relatively high-interest loan that can be used to fund the down payment on your new house and cover expenses if you’re juggling two mortgages. The loan is then repaid after selling your current home, usually within six months.

Option 3: Use A Home Equity Loan To Buy

According to the Financial Consumer Agency of Canada, A home equity line of credit (HELOC) is a secured form of credit. The lender uses your home as a guarantee that you’ll pay back the money you borrow. HELOCs are revolving credit. You can borrow money, pay it back, and borrow it again, up to a maximum credit limit.

A HELOC could be one of the ways to finance a new house while selling your current one. HELOCs come in two main types: combined with a mortgage or stand-alone.

The combined version offers both a revolving HELOC and a fixed-term mortgage, letting you finance up to 80% of your home’s value, with no fixed repayment amounts for the HELOC portion.

Stand-alone HELOCs, on the other hand, operate separately from a mortgage and require at least 35% equity. They offer flexibility in repayment but need disciplined management to avoid overborrowing.

HELOCs have benefits like lower interest rates and repayment flexibility but come with risks, including variable interest rates and the potential for your home to be repossessed if payments are missed.

It is crucial to shop around, understand the terms, and plan repayment carefully. Optional credit insurance and debt consolidation are also available features. Before choosing a HELOC, assess your financial goals and consider whether this product aligns with your needs and budget.

Option 4: Borrow From Your Investment Funds

Balancing selling and buying a home at the same time can be challenging, especially when your finances are tied up in your current property. If you’re considering buying a house before selling, tapping into your investment funds might be a smart way to bridge the gap. For example, withdrawing from a Tax-Free Savings Account (TFSA) offers flexibility, as funds can be accessed tax-free, providing a quick boost for your down payment. However, it’s important to note that any withdrawals affect your future contribution room. Alternatively, using non-registered investments can help fund your next home, though you’ll need to account for potential capital gains taxes. Understanding these options is crucial for those navigating the complexities of how to balance selling and buying a home at the same time.

For homeowners unsure whether to sell first or buy first, another strategy to consider is borrowing from your Registered Retirement Savings Plan (RRSP). While the Home Buyers’ Plan typically benefits first-time buyers, those planning to buy a new house before selling the old one may still tap into their RRSP, but there will be tax implications. Ultimately, consulting with financial advisors and your real estate agent can help you weigh the pros and cons of buying and selling a home simultaneously, ensuring you make informed decisions tailored to the market conditions in Canada.

Option 5: Do You Need to Sell Your Home to Buy a New One?

As you speak with your agent, you will uncover many pros and cons of buying and selling a home simultaneously. Ultimately, you may consider not selling your home at all, and renting out your current home might be worth exploring. In areas with high rental demand, you could consider listing your property as a vacation rental, entering a rent-to-own agreement, or opting for a traditional lease. This can help you cover mortgage payments while waiting for the right time to sell—or even allow you to hold onto the property as a long-term investment. Plus, retaining ownership means you could benefit from potential property value appreciation, boosting your overall financial portfolio.

However, renting out your home isn’t without its challenges. Lenders may not view rental income as favorably as proceeds from a home sale when assessing your debt-to-income ratio. Additionally, becoming a landlord comes with responsibilities like maintenance and tenant management, all of which must comply with Ontario’s Residential Tenancies Act. Tax implications, such as the potential loss of capital gains exemptions, also need to be considered. To decide whether renting is the right move, discuss your options with your real estate agent and financial advisor, who can help you weigh the benefits and drawbacks based on your unique situation.

Conclusion: Timing Home Sale And Purchase Like A Pro

Navigating the complexities of selling and buying a home at the same time requires careful planning and the right strategy. When debating to sell first or buy first, understanding your options is key. From leveraging a contingency offer on home sale to exploring other ways to finance a new house while selling your current one, or even renting out your current property, there are multiple paths to make your next move less stressful.

The decision ultimately depends on your financial situation, timeline, and comfort with risk. By working closely with your real estate agent and financial advisor, you can confidently approach the pros and cons of buying and selling a home simultaneously and ensure you’re making informed choices in an ever-changing real estate market. Remember that with the right guidance, achieving your homeownership goals is well within reach.

Frequently Asked Questions