When You Need to Sell Before You Can Buy

by Kwee Huset 01/26/2020

Photo by Paul Brennan via Pixabay

If you’ve been renting and preparing to buy a new home, you’ve probably saved up your down payment and are in the process of getting pre-approved for your mortgage loan. If, on the other hand, you’ve been living in a home you own and paying on your mortgage, you may be ready to buy, but only if you can use the equity in your existing property. Logically, that would mean you have to sell your home first, which pays off your existing mortgage, then live somewhere temporarily while you shop for your new home. However, you have more options, and none of them require you to live in a third location.

Option 1: Contingent Purchase

Ask your real estate agent for in-depth information on contingent purchases in your area, since different cities and states can have conflicting rules. This means making an offer on a new home that is “contingent” on your accepting an offer on your current home. Basically, you will do the buying and selling parts of your real estate plan at the same time. While your agent is looking for new homes, they are also showing your home to buyers. You can use the same agent for both parts of the process, which is often cheaper, or you can use a buyers’ agent for the purchase and a sellers’ agent for the sale, which may help you get better deals. Not all sellers are willing to entertain contingent offers since that can put a crimp in their own moving plans, so make sure your agent is aware of your circumstances from the beginning.

Option 2: HELOC Loan

Home equity line of credit or HELOC is a particular type of home loan. These loans are usually second mortgages of some sort but allow you to withdraw the entire amount within a given time period. This means you can keep your current home, and use the HELOC loan to buy your new home. Then, when your current home sells, pay off the mortgage on that home, and get a new mortgage on your new home to pay of the HELOC loan as well. This can be risky, however, since HELOC loans are based on the equity value of your current home, which may not be as high as the market value. In addition, they can have variable interest rates, which, if your old home ends up not selling for an extended period of time, can really start to drain your savings. If you plan to go with this option, make sure your real estate agent knows the timelines you’re working with, and try to find an agent with a “sellers’ guarantee.”

Option 3: Contingent or Rent-Back Sale

A contingent sale is similar to a contingent purchase, but instead of closing relying on you finding a buyer, it relies on you finding a new home and that offer being accepted. These tend to be shorter-term agreements, such as 1 to 2 weeks, but can be longer, even up to several months, depending on your buyer. Be careful and try to have contingencies on only one side of your purchase, since if you end up with too many chained together (you are on contingency, as are your buyers, and their buyers and so on) if one person’s plan doesn’t work, the whole chain could fall through. Alternatively, if your buyer has a longer moving timeline, they might be interested in setting up a “rent-back” agreement. This allows you to sell your home and then rent it back from the new buyers for either a specific time period or for as long as it takes for you to find a new home. This is especially a good idea if your buyers are currently renters on a month-to-month agreement since both of you can move whenever is needed.

If you’re ready to buy a new home, but are worried about selling your current one first in order to afford it, you are not alone. Make sure you explain your situation to your real estate agent during your very first meeting. Once they know what kind of agreements will work for you, they can do a much better job of finding your dream home and helping you complete the purchase.

About the Author
Author

Kwee Huset

Chinese Speaking Florida Agent About Kwee she is a multilingual full service real estate agent, REALTOR®. A Cantonese, Mandarin, Chinese speaking Florida Agent in Venice since 2000. Living in Venice Florida since 1991, Kwee Huset is a multilingual. English, Cantonese, Mandarin, Chinese speaking Florida Agent in Venice since 2000 helping others to find their dream homes. The Reasons Kwee Huset is the Florida Agent for You! 1. Working with you and for you. 2. I have been named a 5 Star – Best in Client Satisfaction Agent. 3. Always has your interest in mind so you have someone on your side. 4. Kwee know the neighborhoods, market conditions, zoning regulations, schools and the local economy. 5. Your Property will have the exposure of 53 dynamic websites 24 hours a day. 6. Pays for all marketing and advertising costs. 7. I will guide you through the process and ease stress during your buying and/or selling of property. 8. I am a full time resident of Venice for over 25 years, and own home and investment properties locally. 9. I am a full time Florida Real Estate Licensee for over 15 years with experience in successfully selling homes and investment properties. 10. Gives an unbiased, realistic view of home and your options. Unlike buyers and sellers, Kwee has no emotional attachment to property. 11. I Love Venice, it is a wonderful place to live – many FREE things to do. Kwee has been helping buyers and sellers locally, as well as from other states and countries in all walks of life. I have been easing stress and making attitudes more relaxed during the process of buying and selling properties while meeting needs for over 15 years. I have extensive experience, knowledge and a proven track record that will work with your best interest at heart while maintaining the utmost level of confidentiality in meeting your needs and trust in this fast changing real estate market. I help to educate homeowners by showing them the options; e.g. loan modification, special forbearance, repayment plan, short sale, etc. to save their homes from foreclosure and maintain good credit. Check out my testimonial, it is self-explanatory about my services of which there is no substitute and helped me to achieve the 2010, 2013, 2014 FIVE STAR Best in Client Satisfaction Award (Kwee Huset Realty), Century 21 Quality Service Awards and Century 21 Centurion Awards in the Top 100 among all the agents in Southern Region of Florida from Tampa, Orlando, Daytona Beach all the way to Key West (while I work at Century 21 C & L Real Estate from 2002 – 2005). I can help you with every aspect of buying or selling your home because I’m experienced, because I’m professional . . . and because I care. Kwee Huset Contact Kwee Today! The relationship between a home buyer or seller and their agent is based on trust, shared goals and understanding. I strive to continually improve and to do this I listen and take your needs and wants into consideration. You may contact Kwee at phone/text 941-716-3090. Your personal referrals help local students realize and achieve their dreams as well as provide children and families with Clean Water in 3rd world countries.