Tips for Buying and Selling Downtown Austin Real Estate Simultaneously

Thomajan & Ladner Group June 15, 2021

How to pre-plan for any scenario when you attempt to buy and sell homes at the same time

Do you currently own downtown Austin real estate and want to sell it so you can buy a home that better fits your current lifestyle and needs? If so, you are in the common situation of having to buy and sell downtown Austin homes at the same time.

While simultaneous buying and selling present many challenges, it doesn’t have to be stressful. When you pre-plan for all the possible scenarios, you can prepare for every contingency and make better decisions along the way. Here are some tips to help you out.

Make Sure You’re in the Right Financial Place

Hands withdrawing a dollar bill from a dark leather wallet.

Even when things go right, the process of simultaneous buying and selling has numerous expenses involved. If the timing doesn’t work out as you hope, you will face even greater financial challenges—some of which could drag on for months. That’s why it’s important to dig deep into your finances and make sure you’re in a stable position that can withstand every possible scenario. Here are some important questions to ask yourself:

• If I cannot use the equity in my current house, can I easily access cash for:

• A down payment?

• Moving expenses?

• Closing costs?

• Other fees?

• Will paying two mortgages affect my ability to save for:

• Retirement?

• Contributions to my kids’ college fund?

• Savings for an emergency?

• How long will I be able to make two monthly mortgage payments before it has serious negative impacts on my finances?

Not fully considering your financial situation and talking over possible consequences of buying and selling simultaneously with your financial professional could lead to an unstable financial future. If you find your finances are not as strong as they should be, you may want to sell your current house before looking at downtown Austin homes to buy or scrap the idea altogether until you’re in a better place.

Tips for Those Who Sell Their Current Home Before They Buy

Though the ideal scenario for most in this situation is to sell their downtown Austin real estate before they buy a new home, it still presents some challenges—the biggest of which is being essentially homeless. Due to the hot seller’s market in Austin, selling your current house before you buy is quite likely to happen, so it makes sense to have a contingency plan. Here are some ideas:

• Rent downtown Austin real estate short-term. You can take the pressure off the home search by renting another home for a few months while you continue looking at downtown Austin homes for your family. If you have excess furnishings or personal belongings that won’t fit in your rental, get a storage unit you’re able to make a permanent move.

• Consider a leaseback agreement. A leaseback is a contract between you and your buyer that allows you to lease your previous home and pay rent to the new owner for a short amount of time. This gives you time to find a new home and may also give the buyer time to sell his or her current home before they move into yours. A leaseback needs to be agreed upon before the home closes, so make this suggestion early if you want the buyer to consider it.

Tips for Those Who Buy a New Home Before They Sell Their Current Downtown Austin Real Estate

Miniature red-and-white house beside a set of keys on a wooden table.

Buying a new home before you’ve sold your current house usually presents more challenges than selling first. The biggest of these challenges is financial, as you won’t have access to the equity you’ve built in your downtown Austin real estate and will have to find other options to fund your new purchase. Here are some options to help you out:

• Tap into your equity with a HELOC. You can still take advantage of the equity you’ve built in your home before you sell it if you secure a home equity line of credit. This type of financing is secured by your current home and lets you access either portions or your entire equity line during the “draw period.” The line of credit has a fixed interest rate, and you pay it back in monthly installments.

• Take a loan from your 401(k). Those who have a 401(k)s that allows for loans may be able to tap into their plans to put down payments on downtown Austin homes. The amount you can borrow (and if you can borrow) will depend on the plan, though IRS guidelines state there are maximum amounts you can take.

• Do a cash-out refinance. A cash-out refinance is similar to a HELOC, as it helps you tap into your home’s equity before you sell it. This loan differs as it pays off your entire first mortgage, then takes out a second mortgage for more than what you owe on the house. You get the difference in cash, which you can then use for a down payment and other expenses involved in the buying process.

Once you’ve solved the financing problem, you also need to figure out what to do with two homes. A common option is to rent out your current home as a short-term option to help cover the mortgage or as a long-term investment to create a secondary stream of income. You may also be able to work out a leaseback situation with the seller of your new home if he or she is also in a simultaneous selling situation and has not yet found a new home to live in.

Are you ready to start the process of buying and selling downtown Austin homes at the same time? The best thing you can do is work with an experienced Austin real estate agent like those with the Thomajan Ladner Group to act as your guide and advocate no matter what situation you find yourself in. Reach out today to schedule a consultation.