Buying and Selling a Home at the Same Time??
I’ve been speaking with lots of potential buyers recently who would love to buy here in paradise, but they need to first sell their existing home. Yes, it sounds easy to just “sell your house and buy a new one” but there are quite a few logistical issues with doing so – mainly money and timing.
It’s possible to have money tied up in your existing home in the form of equity and not enough cash-on-hand to put a down payment on a new one.
And in regard to timing, living in Florida is nice, but not if you have to live in your car.
So, how can you pull it off?
First, let me be completely honest and transparent. I don’t want to let on that these are easy and pain-free ways to make the transition. Some of them are uncomfortable but, if you’re willing to put in some work, you can make the dream of living in Florida happen.
Here are a few options to consider.
1. Get a bridge loan
A bridge loan, sometimes called a swing loan, is an option for helping you deal with the financial strain of buying a new house before you sell your old one.
A bridge loan is a short-term loan that uses the equity in your current home as collateral. You can use the proceeds as a down-payment on your new home and then use the proceeds from the sale to pay off the bridge loan. While this can be a great option, and I’ve done many throughout my career, banks have varying criteria for how to apply.
2. Keep both properties for a bit
Keeping two properties may undoubtedly be a financial stretch but it can keep you from having to move multiple times.
3. Ask for a rent back contingency
A rent-back contingency is exactly what you’d think it would be. This would allow you to rent your home back from the buyer from the time of closing until you're ready to move to your new home. Keep in mind, that in this scenario, you're essentially asking your buyer for a favor. They don't have to agree to rent the home back to you. But it never hurts to ask.
4. Find a short-term rental
This is a smart option with the only drawback being that you may have to move twice.
With this option you would sell your home, move to a short term rental and then buy your new home. While you’d have to move twice, this option provides two great advantages. One- it will relieve some of the timing pressure and it will give you the ability to rent while you casually determine where you’d like your next home to be. Some people put all their belongings in a storage unit while they stay at a hotel or with friends or family. Others will rent a new place on a 30-day month-to-month rental agreement, which gives them flexibility as to when they will move.
So which option best fits your current position?