Buying a house before selling? here’s what to know
There are many times when buying a house before selling is ideal. Some homeowners don’t like the hassle of moving in a short time period and would rather take their time to vacate their current home. Others want to make improvements to their new home before moving in and need to stay in their current home in the meantime. Whatever your situation, this can be a tricky path to follow.
This is why you will want a real estate agent who knows how to help you buy your new home first then sell your home. A skilled and well experienced real estate agent will have programs and solutions to help you with this real estate process.
When It Makes Sense to Buy a Home Before Selling
When you’re selling in a seller’s market (there are more buyers than homes for sale), you gain confidence that your current home will sell quickly. This is why it is logical to buy a new house prior to selling your other house, because if it is super easy to sell your home then the other homes are super easy to sell, and they most likely will not want a contingent offer. This is one of the “safest” times to buy a house prior to selling because the gap between the two transactions will likely be shorter.
Of course, this also means that if you find your dream home in a seller’s market, you’ll need to act fast or risk losing it to another buyer.
Another factor to consider is timing. Sometimes, the stars align for you and you find the perfect home in the perfect location at just the right price. These opportunities are rare in real estate, so it makes sense to seize the opportunity to buy a house then sell your home. A real estate agent can help you buy a house with a program design to do this. Then offer you a solution for selling your current home. With the right support, buying and selling can be made easy.
The Downsides of Buying a House Before Selling
Real estate transactions are big deals, something you never want to jump into without weighing all sides. Though they are many advantages to buying a home before selling, there are also many pitfalls that might catch you off-guard.
For instance, your home might not sell as quickly as you might think, even in a seller’s market. This means that you may end up paying two mortgages for a time. And if the crickets are chirping for too long, you might be inclined to accept the first offer that comes along just to be rid of your other home. This means potentially losing equity!
There’s also the potential that banks won’t approve your financing requests. Depending on your income and other factors, banks may be reluctant to allow you to pay on two mortgages, especially if there isn’t a contract on your current home.
This is where using a program designed for buying and selling so that you are not stuck paying up front out of pocket on two mortgages. These programs allow you to buy a house prior to selling your current home. If you did not want to use a program there is another solution. You can sell your home, and then do a leaseback from the new owner for an agreed upon time, so that you can get busy buying a new home.
Alternative Plans to Consider
If you’re ready to make your move even without a contract on your current home, there are a couple of options that might help you move forward.
Make a Contingent Offer
Contingent offers are common in real estate. This means that you put in an offer to buy a home on the condition that your current home sells or that you can obtain financing to cover two mortgages. In a super hot housing market, this is not too common. In a lessor than super-strong seller market starts to see sellers working with buyers who need to sell their current house in order to purchase their new home.
Some sellers are more likely to accept a contingent offer if the contract includes a first right of refusal clause. This means that if they receive another better offer, they can kick you out of the contract within a period of time if you’re still unable to buy. Real estate agents know how to package these together.
Buy a New Home with Cash
If you have enough cash reserves or other liquid assets, you might consider paying cash for your new home. Home sellers love cash offers because it leads to a faster closing and there’s a better chance the contract will go through.
Besides using your own cash to buy a new home we have programs that will use their cash to buy your new house, and then you refinance it. This is a home equity program. They want to have so much equity in your prior house to do this. This makes buying a new one much easier. It costs a little more, and over the grand scheme of things many people that are buying and selling their current home say it is worth it.
Using a program that pays cash for your new home will look at your credit, and they will want you to be able to qualify for a conventional mortgage. These programs offer so much more than cash. They offer convenience, certainty, and confidence. Some of them even allow repair money for the new one. Programs are always subject to change and there are approval requirements.
Whatever your situation, working with a real estate agent is invaluable to the process. Consult with one of our agents to learn if buying a home before you sell is in your best interest and how to approach it. Besides the current amazing mortgage rates, it might be in your best interest to wait for the housing market to loosen up to allow a smoother experience buying a new one while selling your existing home.
Real Estate Agent
In short, a skilled and well-experienced agent will know how to sell your existing home while helping with buying your new one. They should have programs for selling your home after buying your new home first. Selling a home is a very complex job and it gets even more complex when you need to buy your new one before you sell your old one. If you are ready to sell your existing home then check your credit score and home equity in your home first. We have an agent with solutions to help you sell your current home.