Here are four options to help you both buy and sell a home in this market.
Should you buy your new house first and then sell your existing house, or should you sell first and then buy? In a strong seller’s market like we have today, it’s very difficult to get a contingent offer on a home accepted, which means that your offer to purchase is contingent on your ability to sell your current home. Think about it like a seller: If you get five offers on your home and four are non-contingent but one is contingent on the sale of that buyer’s home, you’d probably go with one of those other four offers since they’re more of a sure deal.
If you don’t have the funds for a down payment on a new home or you can’t get approved to carry two mortgages at one time, it can get complicated, but there are potential ways around those issues:
1. Knock Home Swap program. This program allows you to purchase the new home first by making a cash offer on your behalf. They also take over your old home’s mortgage so you aren’t forced to carry two at a time. Under this program, you have up to six months to sell your existing home, which gives you time to prep it for sale. Bear in mind that there is a 1.25% convenience fee associated with this program, and there are some caps on the loans as well.
2. Get a rent-back. When selling your home, you can ask your buyers for a rent-back agreement, which allows you to stay in your home for a set amount of time after you sell it so that you can have time to find and purchase a new one. Sometimes you can get a free rent-back, and other times you simply pay the buyer’s mortgage during that period. There are some risks involved with this option, particularly if you can’t find a replacement home in the given time frame.
3. Use a contingency. This option isn’t ideal in today’s market, but it is possible to make the sale of your current home contingent on your ability to find a replacement property. Buyers in today’s market tend to go for that because they want to get in a home just as bad as you do.
4. Move into a short-term rental. You could sell your current home first, and while you look for a replacement home to buy, you could move into a short-term rental like an Airbnb or Vrbo. Of course, you’d have to store your belongings in the interim; you could contact a moving company to have them store it, and then move it all over to the new house once you find it.
If you have more questions about how to navigate both of these transactions at once or anything else to do with real estate, don’t hesitate to reach out to us. We’d love to hear from you.