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Today’s topic is buying a home without selling your old one first. Conventional wisdom advises against this approach due to the risk of being burdened with two mortgage payments. However, given the current market conditions characterized by low inventory and fast-paced buyer activity, it’s crucial to be prepared.
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. However, this may not be the most successful strategy in today’s fast-paced market with low inventory. To make the offer more attractive, you can add incentives for the seller. For example, you could offer the seller extra time to stay in their home after the sale or provide them with upfront cash. It’s important to have your home ready for sale when you start looking, as this gives sellers confidence that your home will sell quickly.
2. Finance your purchase with a bridge loan. There is a small level of risk involved in this approach. However, I would only recommend it if I were confident that your current home would sell. Let me give you an example: Let’s say you have identified the home you want, and there are multiple competing offers. To improve your chances of winning the offer, it helps to have a clean, non-contingent offer and a home to sell.
In such situations, opting for a bridge loan is often the only viable option. With a bridge loan, we can set a closing date that gives you enough time. We usually provide an “honor before closing” date, which doesn’t obligate you in any way. This flexibility allows you to choose whether you want to close on your new home first and then move in. Once you have closed on your new home, you can empty out your existing home and prepare it for sale. We can even virtually stage it, among other options. The bridge loan option significantly reduces risk, and many sellers are surprised at how affordable it can be. We work with a lender who specializes in bridge loan financing and offers a great product. One notable feature is their ability to recast the loan. If you’re not familiar with this term, don’t hesitate to reach out, and I’ll be happy to explain it to you.
3. Use a service that allows you to make a cash offer on a home without the need to sell your current home first. However, these services often come with high-interest rates and may offer lower prices compared to the open market. It’s generally not recommended unless you have no other viable options.
If you have any real estate questions or need further assistance, feel free to call or email me. I’m always happy to help.
