In a perfect world, a seller finds a buyer for their house and immediately goes under contract for their new home. Not only getting under contract though, the tougher part is pulling off a simultaneous closing. That means closing on the sale and purchase of homes on the same day. But pulling off a double closing takes more than luck. It takes cooperating buyers and sellers, great closing attorney / title company, and an experienced mortgage lender. While there are advantages and disadvantages of closing two sales on the same day, we explain tips for successful simultaneous closings.
Simultaneous Closing Advantages
- Use sales proceeds for new purchase on same day
- Move one time
- No need for a storage building
- Avoid temporary housing
- Stronger than a standard contingency sale
- Will not have two mortgages at once
Simultaneous Closing Disadvantages
- Increased stress with little room for delays
- A delay in the sale will delay the purchase
- Delays in the purchase may cause a housing gap for the seller
- May have to give or accept more concessions to keep on schedule
- Usually requires the purchase to include a contingency which some sellers may not accept
While there are some potential disadvantages of a double closing, using the tips below increases the chance of success.
Simultaneous Closing Tips
- Include enough time for both closings
- Order all inspections & services early
- Use same settlement agent, attorney, or title company for closing
- Choose an experienced lender
- Choose a good Realtor
- Close in the morning
- Communicate among all parties often
Include Enough Time for Both Closings
Sure, everyone would love to close a purchase in record time. Although when it comes to coordinating a same day, double closing, give yourself more time. Trust us, more time is better. Foremost, allow time for unexpected delays. Things happen and you have to expect them. For instance, appraisers are busy (everyone is these days), repairs need to be made, unexpected qualification issue, weather issues, title issue, and so on. Next, closing on a house does have some stress because of the unknown. But, trying to close to houses on the same day in record time could get really stressful. In the end, consider a 45 or 60 day closing instead of the 30 day closing. Although, cooperating parties can certainly make it happen much quicker if desired.
Order Inspections Early
Even though you allow extra time for the closing, do not delay on anything. From the start, get your inspections completed in the beginning. If there are any property issues, you want to know ASAP. Finding out at the end creates more stress and increases the chance of both sales falling apart at the last second. By receiving all inspections early, parties know where they stand and feel more comfortable with reserving the movers, etc.
Common Inspections to Order
Depending on the home, property, geographic area, loan program, and property condition, here are a few types of inspections to consider.
Using the Same Settlement Company for Both Parties
In a simultaneous closing, it’s advantageous to involve fewer parties. It is easier to communicate, and there are fewer moving parts. For long-distance moves, different settlement companies typically need to be used. But, buying and selling in a local market could benefit by using the same settlement company. Rather than the settlement agent for the sale having to wire funds to the settlement agent of the purchase, using one company means the funds are available right away. First of all, there is not a huge advantage in following this idea. However, it could save some time and stress. Although with how quickly an attorney may wire the funds to another, choosing separate representation is not a big negative. Furthermore, if there is a dispute between buyer and seller, a settlement company representing both sides would have to back out, resulting in each party retaining their own representation.
Choose an Experienced Lender
When a mortgage is involved, having an experienced loan officer is vital. Not only that, but the actual lender in the background needs to back up the loan officer too, which means that ordering services, underwriting, and closing departments need to be efficient as well. If the loan officer or lender drags things along, stress increases, and chances of closing on-time reduce. Using an experienced mortgage lender that consistently closes on-time, provides accurate approvals up-front, and provides constant communication to all parties will make a huge difference in a successful double closing.
Choose an Experienced Realtor
Selling and buying two homes at once, not only requires a good lender. Additionally, having an experienced Realtor is paramount to pulling off the double closing. In any purchase, negotiating skills, market knowledge, organization, communication, and time management are very important. Yet, pulling off a double closing increases the need for strong representation by an experienced Realtor. This is especially true when issues come up and usually, something will come up.
Close in the Morning
Many believe that closing one purchase in the morning and one in the afternoon is required. Although it isn’t necessary to close early and late like that. The important thing is that the sellers need to have their sale close and record before the purchase. At least when the funds from the sale are needed to purchase or if the purchase requires the sale, it must happen in this order. So, for optimal results, it would be best to close both in the morning. Therefore, both have an opportunity to fund and get recorded on the same day especially, if the funds are being sent from one settlement agent to another.
Communication is Key
Finally, communication is key. When having so many parties involved in keeping these two closings on schedule, everyone needs to communicate both verbally and in writing. When there are issues, talk about them and get it handled. Good or bad, communicate for the best chance of success.