Buying and Selling: How to Handle Financial Overlaps

by Jesse Marks 01/03/2021

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Image by StartupStockPhotos from Pixabay

Unless you're a first-time home shopper, you'll need to acquire your next home while selling your current home. How do buyers finesse this?

When buyers are competing with each other for a tight inventory of available homes, the ones who are ready to come to the table fastest, not the ones with contingencies, are most likely to succeed.

So, what's an ordinary buyer to do? Here are the top solutions—not all for the faint of heart!

  • The collaboration: Ask the buyer of your current home to go ahead to closing, but let you rent it for a month or two past then. If the buyer really wants your place and is in the position to do it, your problem is solved. Obviously, this arrangement isn't for all buyers. But every situation is unique, and this might work for yours.
  • The photo finish: Plan to schedule simultaneous closings on both homes, if a motivated, approved buyer can agree to wait for you to complete your purchase. It's been done. There is some risk here, not to mention moving van challenges! If your buyer has to pull out for any reason, you may still have to close on your new home. 
  • The bridge loan solution: With a bridge loan, you can purchase a home before selling, borrowing against your current home equity until you have the sale proceeds in hand. These are meant to be short loans. A bridge loan will get pricey if your home takes longer than expected to close. Steer clear of depending on this kind of loan for more that the span of a few weeks.
  • The contingent offer: You can line up a new home without having to take on the new mortgage until you're done with your sale. Yet few sellers are happy to accept contingent offers and hold on until a buyer's home sells. Contingent offer agreements usually only stay open for about 60 days and often have clauses that can accelerate the buyer's need to commit, allowing the seller to accept another offer. 
  • The sell-and-hotel method: This is a good way to reduce risks. Sell your home, take stock of your bank account, and know exactly what you can comfortably purchase. Store any furnishings you plan to take with you, and get a short-term rental for yourself. This means moving twice, but it also means you have money from the sale, and you're not buried under two mortgages.

Selling one home to buy the next makes the already complex matter of home buying...more so. But an experienced real estate agent can lead along the best path for your circumstances and put you in touch with financial professionals where needed. 

About the Author
Author

Jesse Marks

I spent years as a Law Enforcement Officer with the DC Housing Authority Police Department; it was my duty, and a privilege, to protect and to serve the public interest. I use that same dedication and commitment to my clients advantage. With the proper information and guidance, your home buying or selling, adventure...will not be intimidating. INTEGRITY Buying or selling a home is the most important transaction in your life. Because of that, it is important that you work with someone with integrity, that you trust, and feel is a market expert. People trust me with their most-valuable asset. It's a responsibility I take very seriously. I know that your success is my success. LOCAL EXPERTISE I offer local expertise in a home market tailored to meet your needs. As a local professional, I know the neighborhoods, schools, market conditions, zoning regulations and local economy. I will do the leg work, keeping you up-to-date with new listings and conditions as they impact the market. I will make the process as pleasurable and stress-free an experience for you as I can. SUCCESS I don't measure my success through awards received or achievements, but through the satisfaction of my clients. Whether you are looking to buy or sell your home, I will provide sound and trustworthy advice to help you achieve your real estate goals. Let me guide you through the complexities of buying or selling your home, eliminating hassles and stress. I look forward to working with you.