Real Estate by Nick Abbadessa
Nick Abbadessa
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How to Buy and Sell a Home at the Same Time

If you’ve ever had to buy one house, while selling another, then you can probably attest that it’s no easy task. In fact, it can be quite stressful. What happens if you buy your new home first, before selling your old one? You may end up having to worry about two mortgages. Or, what happens if you sell your home first, before buying the new one? You may have a difficult time finding a temporary place. So what can be done?

 

Buying a home before selling

If you decide to buy first, you do have options:

(1) Make an offer with a sale and settlement contingency:  Here, if you’re concerned that you’ll sell your home before buying a new one, you can find your dream home first and make an offer with a “sale and settlement contingency.” Such a contingency allows you to make an offer on your new home, “contingent” upon selling your current home first. Note however, before taking this route, talk to your Realtor first because it’s not always the recommended strategy in a competitive market. If your seller, however has had difficulty selling their home, this may create a win-win situation for the both of you. Reason being, usually the seller of the home you’re interested in is still allowed to obtain offers from other buyers on the ground that you’ll have the first right of refusal the contingency can’t be removed when a second offer comes in.

(2) Purchase with a HELOC: If you qualify for a HELOC (Home Equity Line of Credit), you are able to borrow against the equity  you’ve built in your current home and use these funds to put a down payment on your new home and then pay it off when your current home sells.

(3) Purchase with a bridge loan: A bridge loan, also called gap financing, is a short-term loan to cover the expense of buying a home while you’re waiting for your other transaction to close. Finding or qualifying for this program isn’t the easiest, but when obtained, it is a solution for the interim. It just has to be paid off when your original home sells.

(4) Rent out your first home: If you don’t need the funds from your original home for a down payment, you may wish to find temporary renters to cover the mortgage expense while you’re waiting for your property to sell.

(5) Use your savings: The simplest route, but not always possible, is to use your savings to pay for your new down payment.

Buying your new home before selling your old one has its upside. For example, you’ll have a place to move into immediately and would only have to move once. By not having to move into an interim property, you’ll also save on temporary housing and storage costs. Furthermore, you don’t have to settle for a property just because you’re in a rush to buy a house. You can stay in your old home till you find a new place or your old home sells. However, it also has its downside. While you may not be in a rush to buy, you may feel rushed to sell. Consequently, you may accept a lower offer than you would otherwise. Additionally, if you don’t have the cash and choose to rent out the property instead, well…being a landlord isn’t always easy. Moreover, if your funds are limited during the interim, you may be at a challenge to make as competitive of an offer as you wish.

Selling a home before buying

If you instead decide to sell first, you also have a few options:

1) List first and then make an offer with a settlement contingency: Again, with a settlement contingency, you can let the sellers of the new property you wish to buy know that you’ll but the new home contingent on the sale of your current home. Therefore, only once your existing home sells, will you buy the new home.

2)  Request a Rent-Back Agreement: A rent-back agreement is when the buyer of your existing home allows you to stay in the home for a set period, in exchange for rent, while you’re waiting to purchase your new home. The downside, of this however, is that you may receive fewer offers.

3) Find a temporary rental or housing with family/friends: Find a temporary rental to live in after you sell. Although you’re technically having to move twice and/or placing some of your property into storage, this is a great option is at allow you to close your existing sale before entering another. It can also be less stressful and take some of the pressure off in terms of timing. In particular, if you have friends or family who would allow you to live with them for the interim, this can help a lot.

Selling a home first, also has its pros and cons. Pro, you’ll know how much and will have the cash from your sell to buy your new property. So, you won’t feel financially constrained or rushed. Furthermore, again this can the least stressful option as it’s a lot of times easier to close one transaction before starting another. That said, there are also cons. Again, you’ll have to find a temporary place and/or storage, both of which can add expenses.

There you have it! When it comes to real estate, there are three main goals: To sell your home for the most possible, buy a home as cheaply as possible, and of course get through these transactions as quickly and smoothly as possible. Such success has a lot to do with the Realtor you work with though. I can help you with both selling your current home and finding your dream home to help meet this goals. Whether you decide to buy or sell first, we can talk and make a strategic decision on what would be best for your case.

And as always, if you need any help listing or buying a home, please don’t hesitate to reach out.

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About Nick Abbadessa

Picture of Nick Abbadessa

Nick Abbadessa

Realtor, BA, Cert. Luxury Home Specialist

nick@soldbynick.com

626-269-2751626-269-2751 main

RE/MAX Masters Realty

1030 Bonita Ave. La Verne, CA 91750 | BRE#01398872 |Office BRE#01064901

Reviews

5deancc78

Nick's overall ability to identify what his client is looking for in his/her home is second to none. He is very knowledgeable in all aspects of the home buying/selling process. If you’re looking for a real estate agent that is honest, knowledgeable, and... (more)

5ANaka

Nick is a plethora of knowledge when it comes to real estate. He is a very good communicator and always keep you in the loop. He is also very proactive and on top of things. He knows how to accommodate your needs and doesn't waste your time showing you... (more)

5jeff_ims

Nick patiently worked with us two months until we found just the right home to buy. When it came time to make an offer it was then that his deftness and wisdom made themselves apparent. Real estate transactions involve lots of detail, lots of money, and... (more)

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