Sometimes the stars align and you get an offer on your house the same week you find another one to buy. If buying the new home of your dreams is contingent on selling your current house, scheduling a simultaneous closing for your sale and your purchase might seem like the ideal answer. You won't have to find a place to live between closings, nor will you have two mortgages to handle. Simultaneous closings are delicate balancing acts, however, that require planning as well as perfect timing.
If your lender performs simultaneous closings, it's easier to accomplish if the buyer and seller use the same title company. Since state guidelines vary, check with the state where you intend to schedule a simultaneous closing to make sure you comply with all requirements.
Include a Contingency Clause
Include a contingency clause in the contract for the house you want to buy. Specify that the sale is conditional on you being able to sell your current home. This will protect you if something goes wrong with the sale of your home and you aren't able to close simultaneously.
Coordinate the Closing Date
Consult with your buyer, your seller and your mortgage lender when choosing a date for closing. You need to know when your buyer's funds will be available and your loan will be approved so funds will be available to pay your seller. The closing date must be convenient for the seller, too, so he won't have problems attending the closing.
Allow for Unexpected Delays
Refer to a calendar to narrow down your closing date. Target early to mid-month, early in the day and early in the week. This will give you some leeway in timing if something goes wrong or you end up needing further information or paperwork for one of the closings.
Resolve Issues Immediately
Take care of issues as they arise instead of leaving them to the last minute. This can include arranging the inspection of the homes and verifying that repairs are completed. If a mortgage company is involved in either or both of the transactions, the loan officer will order the title search. If not, contact the title company and order the title search at least on your home. The seller should take care of the search on his home, but verify that he's doing it or offer to do it yourself to ensure that it gets done.
Facilitate Communication Among All Parties
Keep communication lines open between the buyer and the seller on a regular basis. A once-weekly check-in to make sure everything is still on schedule will keep you aware of issues that may need to be dealt with. Communication with your mortgage lender is recommended, as well, to ensure that your loan officer has all the information and documentation she needs and that you're still on track to close on the date you've chosen.
Coordinate Meeting with Escrow Officer
Meet with the escrow officer at the title company on the appointed date. She will have all of the documentation prepared for both the purchase and sale transactions for you to sign. The escrow officer will then meet with your buyer and your seller separately to get their signatures and disburse the funds from the sale of your home.
A check will be made out to your existing lender to pay off the mortgage on your home, a check to the seller of the home you're buying for the amount of your down payment and a third check to you if there are additional funds after the mortgage and the seller are paid. The title company takes care of recording the documents with the appropriate county office, and at that point, the transactions are considered final.
Lender Won't Perform Simultaneous Closings
Some lenders don't allow simultaneous closings. If you want or need to do a simultaneous closing but the lender won't permit it, you still can still close on both homes on the same day. The seller of the home you are buying must agree to deed you the home "subject to" the existing loan. It's putting the agreement in writing that the title company will use the proceeds from your buyer's mortgage to pay off your mortgage, pay the seller the agreed upon amount and give you any additional funds left over.