Real estate market of the present date is saturated with investments going in and out by the day. On any single day many properties are being bought and sold. It might seem that selling property and buying one might be an easy process however it can get quite complicated. The selling process can take months even if done in the best possible way. On the other hand as a buyer of property you will most likely have to compete with a number of buyers in terms of presenting the best offer to buy the property. Long story short; real estate can get quite complicated at times.
Since real estate matters can get complicated it is usually preferred for any investor to keep a level head and move one step at a time; however this is not what the article is about. In a few observed cases it is perhaps more beneficial for an investor to carry on two operations of being on the outlook for buying a property while they are selling their own at the same time. Why do such situations arise and how should one strategize with them? Keep on reading.
Reasons:
Switching Residencies in a hurry due to job
One of the biggest reasons is switching up your residency in state of a hurry. Haste makes waste; however in some situations you have to find a property for sale, sell your own property and move into your new residence. Such situations can be moving nearby your family in a large city to feel safer; or due to a office or job transfer one might find it best in the situation to switch up their properties. these situations are not everyday cases and generally switching properties in a hurry is not recommended; but in cases one has to do so; it is the best route for them.
You found the perfect offer:
Real estate market is subject to constant change in the property prices and rates. You might be on a pre planned business schedule but due to some unforeseen circumstances, the dice may roll perfectly in your favor. You might have set your eyes on a certain areas properties whose rates are in the downward trend with a chance of high appreciation in the upcoming months. Atop of that there are ideal properties for sale there. Such is another situation where one might find it beneficial for themselves to head into another investment while another property of theirs is selling.
In such cases the investor is overcome with the ideal condition of the market and it becomes highly favorable for them to buy a property in said area as their other properties are in between dealings.
To meet the budget of buying property:
Generating finances for real state deal is the first hurdle of investment. Many people will dive into a property and be left with a sum that is not able to buy another property for investment. House flipping is one of the most common practices in real estate industry however it requires time and the payscale is variable. To bridge the time gap between closing one property for sale and then moving to look for a new one to benefit off of; real estate investor will find it much more beneficial to do both tasks of selling one property and looking for a new one at the same time. This is another situation where buying a property while another sells is ideal for an investor.
Downsides of buying a property before selling yours:
As we discussed above buying a property before selling is not for everyone. The situations in which such scenarios become useful are quite rare and niche. In the moment buying a property before your others sell is surely useful but it has a few downsides from an investment point of view:
Dealing with pressure of the situation:
It is not unheard of that investors get overwhelmed by the amount of work they have to do. It is the best option in any case to process manageable amounts of work at a time so that you can make the best decisions possible. Real estate success comes from close observation an level headed decisions if one gets puzzled by the properties and deals at their hand; the results can prove to be disastrous.
Buying a property while you are making efforts to sell another one is definitely one of those situations where being under pressure is quite common. Buying and selling real estate are literal opposites to one another. On the seller end; you are marketing your property, taking offers, weighing the pros and cons, producing paperwork while on the buyer end you are surfing the market for the property you are looking for and then making offers to another seller; if someone does not have the capacity to take these two side by side; they should reconsider their decisions.
Generating expenses:
You cannot buy a property without money at your hand; n most situations a person is selling one of their properties to buy a new one; if the property hasn’t yet been sold; they certainly do not have the money at hand to invest into another one. This can lead to making contingent offers and taking loans; which can be favorable but requires a person to get out of their way and carry out another process which can prove to be quite tedious.
How to buy a property while selling another:
Applying for a loan:
One of the biggest hurdles to dive into two investments at the same time is of generating finances to invest in two properties at the same time. One of the easiest ways to bridge the monetary gap is to get a loan from bank. You should be able to get a loan much easier in cases of selling a house in the process as it gains trust on the bank’s end that you are capable of paying off the loan soon as the cash flow from property sale comes in.
In real estate taking big loans is almost never recommended as failed investments can lead to the investor being indebted however with the leverage of actively trying to sell a property you can surely pay it off in the most reasonable amount of time. With the worry of expenses being eliminated, taking loans in such cases is not the worst or least desirable option.
Contingency offers:
These offers can be quite useful for those who want to sell property as they look for a new one. Once again such offers help to alleviate the issue of covering expenses. In such offers you make a deal with the home seller than you have the backend plan of selling your own property to generate enough money to invest in this house; you will be able to pay as soon as your house sells. This helps you to get in the attention of a home seller as sort of pseudo reserve it for yourself. Buyers in this case also pose the stipulation that in case their house fails to sell in time they will back out of the deal; giving the owner a timeframe will make them gain confidence in your deal offer as compared to other contenders for a specific time limit.
For a home seller; accepting a contingency offer is not their first priority while selling homes. This is mainly because sellers have to compare and contrast the different offers they get from potential buyers. Contingency offers are not easy to make but in your specific case where you are selling a house to generate finances to buy this new property; making such an offer within a specific time window might be the best option to go for. You never know the situation of the seller either and so they might agree for such an offer from you.
To further gain the trust of a seller; contingency offer will often produce a contract and pay a sum of advances to the seller to further solidify that they are serious about this investment. Once the time period runs out and you are unable to pay up; the seller can repay your advance payments and this contract between the two parties diminishes.
Conclusion:
Buying a property while you are waiting for yours to sell is not an everyday situation; but for those where the need does exist; it can get quite tricky. Whether people are trying to move quick, found an ideal offer or simply trying to get funds for putting towards a new investment; such a situation can be common.
Such investments can be burdening and might leave you at trouble for generating finances. Best solution to tackle such situations is through applying for loans or contingency offers to get properties sold to you quickly. We hope this article was informative for you!
