Should Your Purchase & Sale Occur On The Same Day?

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Should Your Purchase & Sale Happen Same Day

People often think of moving to a new home and a fresh new start.

Whether it be for up-sizing their home, downsizing, or a lateral move to a more suitable area, or it can be to a house or condo with more suitable features.

But when people think about moving and the lifestyle change they don’t think about the logistics of moving day.

Quite honestly, that’s one of the many benefits of hiring a really good Realtor.

They don’t just sell your home or help you buy a home.  Areally good Realtor will help you handle the logistics.

One of the things that might seem obvious to most people or maybe I should say like the only option, would be to have the sale of your home AND the purchase of your new home close on the same day.

If you are counting on the proceeds from the sale of one property in order to help finance the purchase of the other property how could it go any other way.  

Well … there is another way.  And quite honestly I think it’s the better way.

My advice is you should never close both transactions on the same day, or what is called a simultaneous closing.

There is something called “Bridge Financing” that a good Mortgage Broker can help you with.

By the way, make sure you watch my video about the Difference between Mortgage Brokers vs. Dealing with the Bank Directly.

A Good Mortgage Broker can help you arrange “bridge financing” which works as follows:

If the Bank has proof you’ve sold your current property, if the sale of your property occurs a few days or a week after the purchase of your new home, they’ll lend the full funds to close your purchase ahead of your sale being completed.

Let me put it another way using numbers.
You’ve sold your home for $1,000,000. You have a $300,000 mortgage currently.

The $700,000 equity you will be getting from the sale will go towards your down-payment on your new purchase of (for examples) $1,200,000.00.

So instead of the bank only lending you the $500,000.00 difference (as it will amount to after your sale closes) for the first few days or “bridge” period they will lend you the full $1,200,000.00.

So you are effectively paying interest on the additional $700,000.00 for the few days or weeks that you are ‘bridging’.  

Now you might think that sounds like a lot, but depending on lender policies and current rates, and the length of time you actually bridge, if it’s just a few days or a week, it might only amount to a couple or few hundred dollars extra.

But it’s well worth it and here’s why.

While the Realtors and Real Estate Lawyers might be thorough and do a good job, some things are out of human control.

For example, the electronic transfer of funds from the Buyer’s Lawyer to your Lawyer when you sell your home.
Or the registration of the Title of Property with the Land Registry Office.

Sometimes the Land Registry office and systems can be delayed or back-logged or have issues.

So, it’s not unheard of for the Lawyer to call a client and say due to delays at the Land Registry office, or due to electronics it’s now 5:00pm and Land Registry is closed so we can’t complete the transaction until tomorrow.

Now, if all of your belongings are packed wall-to-wall on a moving truck, you not only have the issue of dealing with the movers for an additional day, and where they store your stuff over night.

But you also have to find somewhere to stay for the night.

And even IF everything does happen successfully the same day, what if you are out of your home by noon, but get the keys to your new place until 5:00pm.

That’s 5 hours of paying the movers to do nothing.

But wait there’s more. What if you do leave one place at noon and you are lucky enough to have your keys to the new place by noon.

When you get into the new place you might want to clean some things, you need to start right from putting toilet paper on the rollers and cleaning shelves in cupboards and everything else.  

The chances of being ready to eat and sleep there on the first night might make things very rushed and uncomfortable.

So for the small cost of “bridge financing” I always suggest you try to close on the purchase of your new property a few days or even a week or two before the sale of your current property so you have some time to get the new place ready for living.

If you’re moving into a Condo and attempting a same-day closing, what happens if you booked the elevator for the movers on that day but your purchase didn’t close on time until the next morning?

Or your closing was later than expected and you missed the time window allocated for the elevator. You might not get the elevator again for a few days if it’s already booked by someone else.

If you want to know more about simultaneous closings you can email or call me any time. 

If you are thinking of buying or selling and want to talk more about how to do it safely and smoothly … I’m always happy to chat.  Just get in touch with me by email or phone.


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