How can you buy a home if you need to sell one first? I’m asked this question by my clients all the time, and I understand why. Sure, it might be easy to sell your current house in this market, but it’s a lot harder to find a new one. Today I want to go over your options when looking to buy and sell.
The first thing you should do is talk to an experienced lender to make sure you actually need to sell before you buy. There are programs that let you buy with less money down; then, you can re-amortize your loan using the funds from your sale to lower your monthly payment. However, if the lender confirms this isn’t an option for you, here are five other ways you can both buy and sell a home:
1. Sell first and find temporary housing. You might have to find a place to rent for a little bit, but this method allows you to take your time while searching for a new home. The two main downsides are that you risk being priced out of the market and having to move twice.
2. Buy first with a home-sale contingency. The big positive here is that you’re only moving once. However, in a hot seller’s market like ours, most sellers won’t even bother reading over these offers. Even in a normal market, you’d probably have to offer extra money to make the contingency worth it for the seller.
"Each option has its own set of pros and cons."
3. Sell first and negotiate a rent-back agreement. When you sell your home, you can ask the buyer to let you stay in your old house after closing for a time while you shop for a new one. The main benefit to this option is that you have the funds from your first home sale so you can make a competitive offer. However, not every buyer is willing to rent your home back to you. Also, if you can’t find a new house before the agreed-upon time is over, you’ll probably have to find temporary housing.
4. Sell with a buying contingency. This is the opposite of a home-sale contingency. The main benefit is that your home will be under contract before you make offers, which is very convenient. However, most buyers don’t have a timeline flexible enough to accommodate this contingency.
5. Use a home-trade program. These include things like instant cash offers, bridge loans, and equity advances. These are pretty complicated, so I’ll have to do a separate video on the topic. In the meantime, reach out if you’d like to learn more about each program.
If you have questions about today’s topic or anything else related to real estate, please call or email me. I’d love to hear from you!
