Three Ways to Purchase a Home When You Need to Sell
In 2021, a record-high number of single-family homes were sold in Florida. From approximately 310,000 home sales in 2020, the number reached 350,500 in 2021. While this may be great news for sellers, it can be quite daunting and overwhelming for buyers who are looking to purchase a home, especially while selling. Here are three ways you can purchase and sell a home simultaneously:
1. Closing contingent on the sale of your current home
2. Own both homes temporarily if you can afford to carry both mortgages or get a bridge loan
3. Rent a home after selling until you find your new home to purchase
Here are the 3 options to buy and sell a home simultaneously:
Option #1: Closing contingent on the sale of your current home
If you’re looking to downsize or move to a new area, closing contingent on the sale of your current home is an option to consider. This way, you’re not left homeless if the sale of your home falls through.
How does this work?
Essentially, you would have two closing dates – one for the sale of your current home and one for the purchase of your new home. The purchase of your new home would be contingent on the sale of your current home going through.
If the sale of your current home falls through, you would be able to back out of the purchase of your new home without any penalties. However, if the sale of your current home does go through, you would have to close on the purchase of your new home as scheduled.
What are the drawbacks?
With a hot seller’s market, this tactic can be quite challenging. The idea is great in theory, but in many markets these days, sellers have plenty of offers to choose from within days of listing their home. Making an offer with this contingency will certainly weaken your offer especially if your home isn’t already under contract.
Option #2: Own both homes temporarily if you can afford to carry both mortgages or get a bridge loan
Another option is to own both homes temporarily. This can be done by taking out a bridge loan or borrowing against your assets. If you’re able to carry both mortgages, this can be a great way to lock in your housing costs and have some time to find your perfect home.
What are the benefits?
– You can take your time looking for your perfect home
– You’ll have a place to stay while you’re looking
– You won’t have to sell your current home until you find the perfect replacement
What are the drawbacks?
– You’ll need to be able to afford two mortgages
– The interest rates on bridge loans are usually higher than regular mortgages
– There’s a risk that the bridge loan won’t be refinanced when it expires
Option #3: Rent a home after selling until you find your new home to purchase
Another option you might not have considered is renting your home back after closing. In this case, you would get all of the proceeds from the sale without having to move – which gives you both the time and money to purchase a new home.
This is asking a lot of a buyer, however, in a seller’s market, it could be working considering.
You may also consider renting a home temporarily after you sell your current home until you find your new home to purchase. This way, you’re not left homeless if the sale of your home falls through or while you wait for your new home. You’ll also have some time to find the perfect home the purchase.
Again, buying a home when you have a home to sell can be tricky business. I’ve seen transactions where 5 (or more) families are all buying and selling contingently, which creates a really long string of dominoes!
Orchestrating a transaction like that is an art form and you need a great real estate agent who can guide you through that process.
If you have been thinking about making a move (or if know someone who is), we can help! Just reach out. No pressure, no sales tactics, just helpful advice and the guidance you need! We are hear to help with your real estate needs in Mount Dora and Beyond.
ERA Grizzard Real Estate
P.S. Be sure to check out our free local Facebook Group, Moving to Mount dora. It’s a great place to connect with other community members and get weekly updates on the best events and happenings in and around town!