Buy first, then sell? Or vice versa?
Homeowners moving up or out have a delicate dance to perform
Buying a home is difficult, but try selling your home and buying another at the same time. On a level of difficulty, this is the gymnastic balance beam of homeownership.
There are about 86 million homeowners in America. If you’re one of them, and you need to move, there’s a reasonable chance you’ll find yourself facing this challenge. Thing is: If you sell before you buy, the clock will be ticking on finding your next home. But if you buy before you sell, you could get stuck paying two mortgages.
Or, you might have to live in a buddy’s pool house for a while. WORK YOUR NETWORK FOR TEMPORARY QUARTERS In 1998, Mark Rust and his wife began building a new house and listed their existing home for sale. About six months before construction was complete, the Rusts got an offer on their old house. However, the buyers wanted to move in right away.
Rust sent out a mass email to everyone he knew in the area, looking for a short-term rental.
“One of my oldest friends from high school offered to rent his pool house,” Rust tells NerdWallet. “It was a small, one-bedroom loft place but had a kitchen and bathroom. We agreed on a rent, put our house contents into storage and moved right in. It was perfect because there was no lease, so we could stay as long as needed and move out as soon as our new house was ready.” Plus, the couple enjoyed the refreshing smell of chlorine in the morning. CONTINGENT OFFERS: NOT VERY MANY PROS Some people in this situation will put a contingent offer on a house — the purchase depends on sell- ing your current home. But that can make an offer less attractive.
“To be honest, contingency offers are less desirable,” says Sissy Lappin, co-founder of ListingDoor.com. “I frequently tell my sellers to pass up contingency offers because of the uncertainty involved.”
Instead, Lappin suggests put- ting your house up for sale first. Once you’ve accepted an offer, then you can get serious about finding and buying a new home.
“Simply having your home on the market isn’t enough to signify that you’re ready to make an offer on another home,” Lappin says. “Once you know that your buyer will actually buy your home, you can put a good offer in on a new one and really bargain from a position of strength.” A BRIDGE LOAN OR HELOC CAN GET YOU FROM ONE HOUSE TO THE NEXT Rather than trying to swing a simultaneous buy-sell scenario, you might opt for a bridge loan, which allows you to tap the equity in your current home. With this short-term financing, you can buy a new home before you sell. You’re essentially financing two homes at once, temporarily. Once you sell your current home and receive the proceeds, you pay off the temporary bridge loan.
However, few lenders offer bridge loans. An alternative is to tap into a home equity line of credit that you’ve opened previously. Either way, you’ll need pristine credit and plenty of equity in your current home.
Like a balance beam routine, selling a house while buying another is something you just can’t rush.