You face many challenges when buying or selling a home, but when you do both at once, the degree of difficulty doubles. If you fail to properly navigate these contracts, you could lose money or even face a lawsuit.
A few guidelines can help move the process along and minimize expensive mistakes.
When you buy a new property first
You might find a desirable new home before you sell your current residence. According to NextAdvisor, you have some contractual options if you need the money from your current home to pay for the new home.
The first option involves putting in a contingent offer for the new property. This gives you an agreed-upon time, perhaps two months, to put your old home on the market and sell it. While some sellers will not agree to this arrangement, others will consider it. When it works, this legal arrangement allows you to buy the house you wanted in the first place.
A second option involves using the equity in your current home to make the down payment on the new house. Then, when your home sells, you pay off that line of credit.
When you sell first
The danger in this scenario comes with not having a place to live once you close on your old home. To avoid this, you can negotiate a lease period in which you pay the new owner a rental fee to occupy the old home until you find a new one. You can also move into a temporary place until you find the perfect home.
Both situations have pros and cons. Planning ahead and working with professionals ensure the best results.