Like the proverbial question, Which Came First – The Chicken or the Egg?, figuring out whether you should sell your current home before or after you buy your new home is a challenging question. There is no perfect answer, but there are several strategies you may want to use, and your REALTOR™️ can walk you through the pros and cons of each strategy:
Sell First, Buy Later
- By selling your house first, you know you will have the money for your replacement home
- If the timing is right, you can close both properties on the same day and move right in
- When the timing is not right, you may have to move your furnishings into storage and find a temporary home
Contingency for Sale of Buyer’s Property (COP)
- With a COP, the purchase of a property is contingent on the sale of your existing property
- For properties receiving multiple offers, sellers may be leery of accepting your offer as there is a level of uncertainty on whether you will be able to sell your property and buy the new property
- The COP may work for sellers whose property has been on the market for a while and are anxious to sell
Rent Back
- When selling your property, you may consider renting the property back from the buyer to allow you time to find a new home and to have the proceeds of your sale to finance the new home
- It is important that both buyer and seller take into consideration time limits, insurance, and utilities, and who pays for any damages that may occur
Seller’s Purchase of Replacement Property
- You may may make the sale of your property contingent on finding a replacement property
- Buyers may hesitate due to the uncertainty of you finding a replacement home
Bridge Loan
- A bridge loan is a short-term loan to cover the purchase of a new home before you list your existing home for sale, and uses your existing home as collateral
- The terms of each loan vary, but generally, you do not make any payments until you sell your existing home, though you are accruing interest on that loan after your new house is purchased
- This allows you to stay in your current home, find that perfect home, and even some time to do a few improvements on your new home – new floors, new paint, or remodel the kitchen
- Bridge loans may carry extra costs over a traditional mortgage
So, if you are thinking of selling your current home and buying a new home, a licensed real estate agent can help you navigate the options to find the best solution for you.
For more information about Allan, please visit https://sonomadreamproperties.com.
Allan Bolchazy is a licensed real estate agent (#02078328) with Corcoran Icon Properties serving Sonoma County.
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