Don’t move twice: Buy your next home without selling your current home first

In this video, Ken Tritle discusses some of your options to purchase your “forever” home first using cash, loans, and other real estate strategies, without selling your family home first. The idea is to avoid having to move twice.

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Since many real estate transactions require the homeowner to first sell their home to free up their equity before buying their replacement property, there is no surprise that there are numerous strategies, products and vendors to help make that transition easier. 

Some of these real estate strategies are:

  • Purchase in cash, or with a loan if you qualify. Buy the replacement home first and move out from the family home, leaving it vacant for showings, eventual inspections and repairs.
  • Concurrent close. Identify and enter into a purchase contract for the replacement home, while at the same time marketing your family home to buyers, with the aim of closing both deals on the same day. 
  • Sale contingent on seller finding a suitable replacement property. This option lets buyers and their agents know that the sale of your family home could be slightly delayed while you identify and get an offer accepted for your next home. 
  • Rent back from buyer after close of escrow. You could move forward with a willing buyer by having your listing agent negotiate a rent back period from that buyer after finalizing the sale and transferring ownership. The rent back period might be negotiated for anywhere from one to ninety days – basically whatever period of time that the buyers is willing to wait. 

There are also numerous loan products that could help you achieve the goal of not moving twice.

Some of these are:

  • A conventional purchase loan. Depending on what you qualify for, these typically provide about 80% of the purchase price of the home.
  • A bridge loan. A shorter term loan designed for this purpose. 
  • A cash out refinance. This product taps into the existing equity of your home, freeing it up to use to purchase your next home. 
  • Home Equity Line Of Credit – or -HELOC. Is another product that taps into your existing home equity. A HELOC is an open line of credit that allows you to borrow any amount up to a preset limit. Interest only accrues when money is out on the loan, and stops as soon as it is paid off.  This is a useful financial tool for your life, if you are disciplined enough to not use it for non-essential purchases.  We are strong proponents of planning ahead. Setting up a HELOC is good option as it will can create a safety net for you in emergency situations. (Note:The lender may be willing to do a cash out refinance or HELOC if the home is not yet listed for sale. Please check with your lender/bank for details including any prepayment penalty once the house sells and the loan gets paid off)
  • Taxable or retirement accounts. Consult with your tax and, or financial advisor to see what the ramifications of drawing funds out might be.
  • I-Buyers and Power buyers – corporations that make a business out of buying homes or acting as lenders.
    • I-Buyers will use technology to arrive at an automated value for your current home, and purchase it from you in cash. 
    • Power buyers act more as lenders, enabling you to make a competitive, cash-backed, non-contingent purchase offer on your new home. Some power buyers have extra funding available if there is a shortfall on the appraisal on the new home, helping to bridge that dollar gap. They may also give extra some funding to better prepare original home for sale and pay that mortgage until home sells.

Of course, many of these strategies are dependent on favorable market conditions, as well as cooperative parties to the transaction.  In red hot, or seller’s markets, buyers might be willing to do more things to help a seller, to ensure that they are the ones chosen to purchase the home. In cooler, or buyer’s markets, sellers do not hold the advantage and getting rent back period or buyers willing to wait out a Contingent on Seller Finding a Suitable Replacement Property, might be harder to find.  

We know that it is easy to feel stuck and frustrated when attempting to make such a large, life-changing move, and our message today is that there are numerous options that might just be a good fit for your unique situation. There is hope. There is light at the end of that tunnel!