In the current market, it’s exceedingly easy to sell your home and at top dollar. But unless you are one of the rare homeowners with the financial ability to pay two mortgages at once, buying a home before selling your current home is not really an option.
It’s a dilemma millions of people are facing in these times of super-low inventory and super-high home prices. So, while shopping for a new home and selling your current home at once may sound like a real estate nightmare, it may be your best option.
Here’s what you need to know to make sure both processes go as smoothly as possible.
BUYING BEFORE SELLING
If you’ve found a home to you’re interested in, your first instinct may be to put in an offer on a new home before selling yours. In today’s market, you’ll likely be competing against other potential buyers. When making an offer, you’ll want to put the least amount of contingencies on your offer as possible. In a seller’s market, having an offer that is contingent on the sale of your current home may end up turning the seller off of your offer. An option to consider is gap financing such as a Home Equity Line of Credit (HELOC) or a Bridge Loan.
A HELOC and Bridge Loan uses the equity you have in your home, which is the difference between your home’s value and the amount owed on your mortgage. A HELOC loans allows you to borrow against your home, giving you access to money based on your home’s value. A Bridge Loan is a short-term loan that allows you to use the equity in your home for a downpayment on another home. HELOC or Bridge Loans may be good options for those looking to buy a home before selling, but it is always important to talk with your lender to know if you qualify for either of these loans.
MAKE A STRONG CONTINGENT OFFER
If you don’t qualify for a HELOC or Bridge loan, you can make an offer on a home that is contingent of selling your current one, but it has to be a strong offer. There are many different ways to make your offer stand out to buyers.
If you need to make a contingent offer, then offer a higher price than what the home is listed for. Keep in mind that most homes are already selling above list price, so let the experts at OnWire Realty pull comps to determine the most competitive offer based on market trends. You could also put down more earnest money and due diligence, offer to pay for repairs, and potentially waive the inspection and appraisal contingency. Be sure to discuss these options with your OnWire agent to ensure you’re creating the strongest offer possible while protecting your best interest.
SELL FIRST, BUT NEGOTIATE A DEAL WITH THE BUY
When selling your home in a seller’s market, you have the upper hand. Buyers are often willing to offer incentives to close the deal and they might be more flexible on the timing. That means you can ask for more time if you need it to find a home to buy without losing out on selling your current home.
You can also request a rent-back agreement from the buyers. A rent-back agreement means that the buyer purchases your home and you rent it from them for a specified period of time. This gives you the flexibility to stay in your home when you’re in the process of moving into your next home.
DON’T BUY…FOR NOW
Many homeowners feel pressured to purchase a new home if they plan to sell. However, moving into a rental property after selling your home may be a good option to consider. If you’re open to moving into a rental, then you can sell your current home and save the money for when the time is right to buy. Depending on your situation this can take the pressure off finding a new place to call home when selling and buying in a seller’s market.
ONWIRE IS HERE TO HELP
While the idea of buying and selling a home in a seller’s market may seem overwhelming, there are many options available to make this transition smooth.
Speaking with your agent and lender can help you decide which of these options is the best fit for your homeownership goals.