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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. If your current home doesn’t sell within a certain time frame, you can cancel the purchase contract without any penalties. To sweeten the deal, your agent can explain to the seller that your house will likely sell fast in the current market.
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. To close your bridge loan faster, try to align the closing dates of your buying and selling transactions.
3. Buy and sell at the same time. This option is the riskiest, but it can make things very easy. Essentially, you use the overlapping timelines of closing on a home, paying your mortgage, and selling your home to pull off a simultaneous purchase and sale on the same day. It can be a little complicated to set this up, but I have tons of experience doing this for clients willing to go the extra mile.
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. Every scenario is different and our goal is to create the best scenario for you- schedule a time to chat 1:1 with us to see what you should do.
