- Options to Buying a New Home Before Selling
- Make an Offer with a Sale & Settlement Contingency
- Buy a New Home with Your Savings
- Purchase a New Home Using HELOC
- Rent Out your Old Home
- Use a Bridge Loan
- Options to Selling your Old House First Before Buying
- Make an Offer with Settlement Contingency
- Sign a Rent Back Agreement with the New Homeowners
- Find a Temporary Rental Place to Live In
Options to Buying a New Home Before Selling
Buying a house while still at your old home is all about timing and often a great real estate agent. The entire process is not only about coordination and logistics, but sometimes taking a risk. In most cases, the seller is at risk because he/she can fail to get a house they’re after, spend a lot of money buying a new house or even fail to get a good house to buy at all.
Therefore, it is very important to assess all of your options before making this big decision. If you are considering buying and selling a house in Detroit, Michigan, here are the options you have:
Buying and selling a house simultaneously is often tricky and most people find it difficult if not working with an experienced real estate agent. For instance, selling your old home first could leave you with no place to live, while buying a new home first will affect your financial situation.
If you opt to buy a new home first, you can consider the following:
Make an Offer with a Sale & Settlement Contingency
This is the easiest and the safest way of selling and buying another house at the same time.
Here, you will mainly focus on finding a new home before you sell your old home. After you
find a house you love, you submit an offer with a sale and settlement contingency which
ensures you buy the home only if you sell the old one.
This scenario is still challenging as it is important to understand the sellers of the home you are looking to buy will likely prefer other offers from interested buyers that do not have a contingency.
Buy a New Home with Your Savings
If you can afford to buy a new house without needing the funds from your existing house, you can do a traditional home purchase. This is a good option for homeowners who are financially stable and are not looking to sell their old homes in haste or in a bad market.
Remember, you are required to be in a good financial position to do it because there are other expenses such as closing costs, moving costs and inspection fees.
Purchase a New Home Using HELOC
Home Equity Line of Credit (HELOC) is a loan that enables homeowners to buy a new home using the current home’s equity. If you qualify for HELOC, you can get the money for the down payment as you wait to sell your old home and settle the loan provided.
Rent Out your Old Home
If you don’t need to sell your old home to buy a new one, or to come up with the down
payment, you can rent it out to help you cover your new mortgage costs.
By doing this, you may maximize your investment by keeping the appreciating asset, or by waiting for the right market when you can sell your old home for a larger return.
Use a Bridge Loan
A bridge-loan refers to a loan offered by specific banks to cover your down payment until your sale closes. If you are considering using this option, you need to talk to your banker because not all banks offer bridge loans and it might be very hard to qualify for such loans.
Options to Selling your Old House First Before Buying
Here are some of the options you can choose from if you decide to sell your old home first:
Make an Offer with Settlement Contingency
When selling your home with a contingency, you will have to list your home first and then wait for offers as you look for houses you can buy. You are not supposed to make an offer on any of the houses you’ve seen until you have accepted an offer on your current (old) home. If you use this option, you need to know exactly what you are looking for so that you can make an offer as soon as you find the kind of house you really want.
You can include a ‘settlement contingency’ when you make an offer to be on the safer side. For instance, if you have a settlement contingent to sell your home by a given date and you don’t sell your old home by that date, you can pull out of the deal and wait until you sell your home. This is a safer approach although it makes your offer less competitive.
Sign a Rent Back Agreement with the New Homeowners
You can agree to pay rent for a given period of time with the person who has bought your home as you look for a new home. The only thing you need to do is pay rent as you are searching for a new home. With this, you can get fewer offers on your home because most potential homebuyers are looking to move in as soon as they close the deal.
Find a Temporary Rental Place to Live In
If you cannot afford to buy a new home with your savings or you don’t qualify for a bridge loan or HELOC, you can sell your home and move into a rental place as you search for your dream home. This option is good if you don’t want to sell your house with a sale and settlement contingency because it can determine how fast you sell your home. It is evident that buying and selling a house at the same time is a daunting task.
If you sell your house first or buy another house first, there are several options you can choose from although they have their pros and cons. You need to determine the best option for you by considering all the factors at hand including your financial situation, the size of family you have, the reason why you are looking to sell or buy a house and your location among other factors. These tricky situations are often best navigated with an experienced real estate agent that can help get the job done.
The best source of information about local communities and real estate topics is your real estate agent. Give Joshua Norber of the Norber Real Estate Group a call today at 248-785-3737 to learn more about the area, discuss selling your house, or tour available homes for sale.