Massachusetts Home Buyer Guide

Buying a home for the first time is often straightforward: hire a buyer agent, get pre-approved for a mortgage, find a home, get your offer accepted, and close. There are some steps in between, but you get the point.

But selling your Greater Boston home while buying your next, known as a buy/sale, buy/sell, or sell/buy, is significantly more complex. In a competitive housing market, the complexity increases when selling and buying at the same time.

3 Main Strategies for Selling and Buying a Home at the Same Time

1. Buying Before Selling

Purchasing your next home before selling your current one has several advantages:

• It avoids homelessness or interim housing.
  
  
• It reduces stress from coordinating two closings.
  
  
• It removes the need for a home sale contingency.
  
  
• It allows for renovations before moving in.

Buying before selling means you have the financial capacity to buy a home without selling the one you're living in. It also means carrying two mortgages, which can be financially taxing if your home doesn't sell quickly. Discuss your mortgage qualifications with your lender or get a recommendation for an experienced and patient loan officer.

If renting out your house or condominium, determine if rental income can offset your debt-to-income ratio or cover your current home loan payments.

Bridge Loans: Bridge loans are short-term financing solutions, but these loans are difficult to qualify for and usually not ideal due to high costs and strict requirements. Alternatives like a Home Equity Line of Credit (HELOC) or refinancing may be more feasible.

2. Selling Before Buying

Selling first lets you:

• Time your sale effectively.
  
  
• Offer flexible closing dates to home buyers.
  
  
• Make decisions without pressure.
  
  
• Research your new area thoroughly.

The drawbacks to selling before buying include the need for temporary housing, which can be costly and inconvenient. Additional costs include storage and moving fees, potential disruptions to children's schooling, and possible pet accommodations.

3. Simultaneous Sell and Buy

Selling your home and buying a new one is the most complex approach; however, it avoids interim housing and double mortgages. Selling and buying contemporaneously involves some risk and potential stress.

Contingencies and Risks:

• You have to rely on the homebuyer of your current home to close on time.
  
  
• You may encounter potential delays, such as from the appraisal or issues related to the title.

Home Sale Contingency: A home sale contingency clause protects you if your home does not sell by the closing deadline on the new property. Sellers generally view these contingencies unfavorably, especially in a strong seller's market.

Kick-Out Clauses: A kick-out clause allows sellers to continue marketing their homes after a seller has accepted your offer. If they receive another offer appealing to them, you must either waive your contingency or withdraw their offer within a specific period, usually 24 hours. In this situation, if the home buyer cancels the deal, they typically will receive their deposit(s) back.

Market Conditions: Market dynamics can work for or against you when selling and buying. High purchase prices may offset gains in a seller's market, while lower costs for your next home might balance losses in a buyer's market.

Coordinating the Buy/Sale

Start by contacting or finding an exclusive buyer agent in your target area. Your agent can recommend trusted listing agents in the area and provide objective advice on home improvements.

Ensure your real estate team—buyer agent, listing agent, mortgage lender, and attorney—are aligned and in communication for a smooth selling and buying experience.

Suitable Housing Contingency: This seller-side contingency allows the seller to cancel the sale if they can't find a new home. While a suitable housing contingency offers protection, it may scare off home buyers. An alternative is a use and occupancy agreement, allowing the seller to stay in the home temporarily after closing. Lenders will require the buyer to move into their new home within 60 days.

When to Begin Your Home Search

If you cannot buy before selling, wait until you are pre-approved and your home is ready to list. Offers contingent on homes not yet listed are less likely to be accepted. A firm marketing timeline will improve your offer and give the seller and listing agent more confidence in accepting your offer.

Navigating buying and selling a home at the same time is challenging but manageable with careful planning, clear communication, and experienced professional support.