How to Sell and Buy a House, at the Same Time!
Selling and buying a home at the same time can be a pain - it’s a bit of a juggling act with some added risk. However, it’s not an uncommon situation. According to the National Association of Realtors, 71% of repeat home buyers owned their previous residences, which means it’s highly likely that a considerable number of them did double-duty as both buyer and seller.
In a normal real estate market, you could hit that perfect timing “sweet spot” where you sell your house {release any built-up equity to use for a down payment} and then find your next dream home. But 2021 has brought an inventory shortage, making what use to be a normal process, much more difficult for sellers.
In this guide, we’ll cover the common challenges you could face, alternative routes that might work better for you, and tips for navigating the process while maintaining some degree of sanity.
Why do sellers need to sell first?
1. Financial reasons - Unless you have a lot of cash on hand, it can be tough to come up with the money for a down payment while the equity is still tied up in your current home.
2. Making your offer stand out - When inventory is low and demand is high, going in with a contingent offer is not a powerful position to be in. If you sell your home first you won’t have that contingency on your offer. Therefore, helping your offer to stand out better among the crowd.
10 ways to buy when you have to sell:
1. Purchase New construction
New construction is the standout option in our market this year. Builders are doing everything they can to keep up with demand. Be on the lookout for a spec home, or maybe consider doing a build to order or custom home, if your timeline allows.
2. Buy land
Buying land is a cheaper option up front. You can then build a custom home when you’re ready.
3. Bridge loan
If you don’t have enough assets for a down payment talk to your lender about getting a bridge loan. This is a short-term loan that taps into the equity in your current home to get the necessary down payment to complete your purchase. This is only a viable option if you’re comfortable taking on two mortgage payments for up to six months or a year, which is the typical term for a bridge loan.
4. HELOC
A home equity line of credit OR HELOC allows you to do a cash out refinance on your current home, take out a home equity line of credit. However, there are rules with this. You can’t take out a HELOC while your home is listed on the MLS.
5. Rent for awhile
While this isn’t a glamourous option selling your home first, we are seeing some of our clients sell their homes then renting until the market balances back out, or until they find something they like. There are additional costs involved with this, and you have to move twice.
6. Explore less competitive areas/price points
Certain price points and areas can be less competitive than others. If you have flexibility consider looking outside of your parameters.
7. Make a contingent offer
While not the best option, this can be done in this marketplace. We are seeing many sellers become frustrated when they have trouble making their offer stand out from other offers that don’t have this contingency.
8. Discuss seller financing options
9. Negotiate a lease back
You might be able to negotiate with the buyers to allow you to close on your home and lease it back from them for 30-60 days.
10. Make home subject to home of choice
You can list your home and make it “subject to home of choice”. Which means you accept the buyer’s offer and the buyer agrees to give you 30-60 days to find a home of your choosing.
Want to reference these options later? Download our free PDF here!
Bottom Line:
There’s no “one size fits all” solution when it comes to selling a home in this market. Everyone’s situation is different. When you’re ready to get started we would love to help talk through the options that are best for YOUR situation.