Three options for those who need to buy a home before selling.
Selling your current home before buying a new one is the conventional way to move. However, depending on your situation, there will be times when buying before you sell is the better option. Whatever your reason, you should know that buying first comes with additional risks, such as paying two mortgages, if your current home takes a long time to sell.
If you’re in a situation where you must buy first before selling, don’t worry. It’s not completely impossible, but it takes some strategic planning to make it happen. Here are three things that will help you buy before you sell:
1. Make an offer with a home-sale contingency. By including a home-sale contingency in your offer, you can purchase the new house once your existing one sells successfully. Inventory has increased, so sellers are now much more open to contingencies compared to the past few months. However, if your current home doesn’t sell within a certain time frame, you can cancel the purchase contract without any penalties.
2. Finance with a bridge loan. A bridge loan is a short-term, high-interest loan. When you buy with a bridge loan, you can use your existing home as collateral to get a loan for your new house. You’ll still have to sell your current house to pay off the bridge loan, but it allows you to achieve your goal without having a home-sale contingency. To close your bridge loan faster, try to align the closing dates of your buying and selling transactions.
3. Sell before buying then negotiate a rent back agreement. You can negotiate a rent back agreement with the buyer of your house, meaning you will rent the house from the buyer after the sale, typically for 30 to 60 days. You can use this time to buy your new house. This can be a stressful process, because there’s a risk that you won’t be able to purchase your new home, and you could end up being homeless. Fortunately, we make sure this never happens to our clients.
Buying a new home before selling your existing one has its unique challenges, but if you can leverage the three options above and utilize the guidance of an experienced agent, you can come up with the best solutions for your situation. If you want more details about this topic or have any real estate concerns, don’t hesitate to call or email me. I’ll be happy to help.