How Do I Buy and Sell a Property at the Same Time

When you are hoping to sell your current property and purchase a new one, there are many methods to consider. There is no exact “right answer”, but you should consider these ideas...

If it's a seller's market

In a seller's market, you may want to consider putting a property under-agreement that you want to buy first, as you could assume that your current property will sell quite quickly.

In an ideal situation, you could find a property where the seller also wants a closing a few months away, which would give you sufficient time to list and sell your property.

You may also want to only consider stating in your marketing/advertising that buyers must agree that their purchase will be contingent on you finding suitable housing. This can limit your buyer pool, but if the market is competitive enough, buyers may seek to be flexible with closing dates to appease you.

If it's a buyer's market

In a buyer’s market, you may want to put your current property under-agreement first, as that would be the more challenging sale.

The last thing you want is to be paying two loans, because you can't sell your current home. Additionally, if you have your current property under-agreement, you will know exactly how much you’re going to get for it (which obviously will help inform what you actually have to spend).

Contingencies

Whether you're buying or selling, you can seek to add a contingency to your contract (though this can be challenging to get accepted). If buying, you can seek to make your offer contingent upon the sale of your current home.

Many sellers won’t consider this, but it is more likely to be acceptable if you already have your current property under-agreement.

And as mentioned previously, you can seek to require that buyers must agree that their purchase will be contingent on you finding suitable housing.

Bridge loans and helocs

Bridge loans are essentially HELOCS (Home Equity Lines of Credits) specifically for those who are seeking to buy and sell a home simultaneously. It’s a short-term loan to cover the down payment on your new home before selling your old one.

Here is one of my mortgage lender’s explanations regarding bridge loans:

“We can do a Bridge loan on the current home up to 80% of the value, minus the current loans. But we must qualify the borrower carrying the first loan, plus the bridge loan, and then the new financing on the new home—so the borrower must be able to carry all 3 loans.

The only difference between a HELOC and the Bridge loan is the timing. If you setup the HELOC in advance –you can use the funds anytime. If you do a Bridge loan, you’re basically just setting up the HELOC when the property is already on the market and therefore the bank considers the property as non-owner occupied which can result in a higher rate and additional costs. So it’s a big benefit to think in advance and do a HELOC early, before you’ve listed the property for sale."

Lease-backs agreements

Another option is a lease-back (aka rent-back, aka lease-and-occupancy-agreement) agreement. With a lease-back, the buyer agrees to lease-back the property to the seller for a short time after the closing.

The seller agrees to pay the new owner rent (or the sale price is adjusted) and gets to stay in their home for a period of time while they search fora new one (with the proceeds of their sale in hand to be available for their next purchase).

Note that a lender may put a limit on the length of the lease-back agreement (no more than 60 days, I believe). If the new owner leases the property for more than 60 days, then the lender could no longer consider them to be an owner-occupant and the buyer would need to obtain a different form of financing.

Contact me about buying or selling your home

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