#TipTuesday: Trying to buy and sell at the same time.

Focus on the sale potential of your existing home first.

You need to be prepared that your home could sell faster than you expected it to, so you need a plan for where you and your family will live if the new owners want the house right away and you don’t have a new home to move into yet. At the same time, you want to be prepared for your home to take longer to sell than you might think. The key is understanding the market conditions for your neighborhood, which an experienced real estate professional can help you with.

Create a list of must-haves, non-negotiables, and like-to-haves.

When it comes to the new home you want to buy, be clear on your needs, such as no remodeling required, in a good school district, three bathrooms, etc. Furthermore, consider the highest price you can afford if your existing home sells at the lowest price you will accept.

Get your current home ready to sell ahead of time, so there are no surprises.

It’s easier to sell an apology-free house or condo than one with issues. In addition, you want to reduce your risks as much as possible ahead of time. The last thing you want is a surprise costly repair to come up when you’re trying to close on the sale of your existing home so you can buy your new one. For this reason, do a thorough inspection of the property before you plan to sell and get repairs done well ahead of time.

Create a timeline.

Be clear about what needs to happen when, and where you’re flexible on dates. Creating a rough schedule of when certain things need to happen will help everyone stay on task. For instance, if you need to install a new garage door on the current home, when will this happen? If you need to be in your new home in the new school district by a certain date, what has to happen before then?

Get your financial house in order.

These two transactions are likely the largest you will have ever handled, so you want to get everything lined up ahead of time. Here are some items to consider:

1. The cost of repairs, fixing up, and staging your current home to get it ready to sell.
2. Setting up a cash reserve to cover the cost of potentially paying two mortgages for a set period of time.
3. Making sure you have 6-9 months in a cash reserve to cover expenses for you and your family.
4. Budgeting for maintenance for the new home you’ll buy. If you’re upsizing, consider how much more you might spend for yearly maintenance on the new home.
5. Budget for remodeling, new furnishings, landscaping, etc. for your new home. What will you need to do right away and what can you live with for a while before upgrading?
6. Cost of renting for a year if you decide to sell your home before you have a new home to move into.

Determine what size mortgage you can qualify for now.

The market and mortgage rates will have changed since you bought your current home, and thus the size of mortgage you qualified for at one point in time may be a very different picture from what you can qualify for now. Understanding where you stand will bring clarity to what you can afford and what is out of range.