The question of what date to sell your existing home versus what date to purchase your new home often comes up.
If you are buying a new home and selling your existing home at the same time, you will have to determine what date to schedule your closing (ie: the date that funds and title are transferred). There are advantages and disadvantages to closing both transactions on the same day or staggering them.
The biggest risk to closing both transactions on the same day is if the case arises where the buyer of the home you are selling isn’t able or refuses to complete the purchase. Of course, if you do not need the funds from your sale to complete the purchase this is not a problem. However the vast majority of purchasers do need the equity out of their existing home first, and this situation will place them in a position where they are short of the funds required to close on the purchase of their new property. This, unfortunately, can place them in a potentially dangerous position as they will likely be off side their contract of purchase and sale.
Another option to consider is to schedule your sale to complete before your purchase completion. This would help increase the likelihood that the funds you require from your sale are available for your purchase; however you would need to find interim accommodations between the sale of your home and the purchase of your new home.
Finally, many banks offer interim or bridge financing which allows you to purchase your new home before completing the sale of your existing home. The banks lend the money to you based on the binding contract of sale on your existing home, and require your lawyer to payout the bridge financing once the sale does complete sometime in the future. For many buyers this is an attractive option as it allows them more time to move items from their home to their new home. That being said, issues can arise if you purchase your new home and then your sale transaction fails to complete as anticipated.
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637
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