Buy Now Sell Later: Buy Your Next Home Before Selling

You’ve decided it’s time to move.

Maybe you need more space. Maybe the kids are getting older. Maybe you want a different town, a shorter commute or a home that simply fits the next stage of your life better.

Then comes the question that stops a lot of homeowners in their tracks:

Do we really have to sell this house before we can buy the next one?

For many homeowners, the answer may be no.

If you have enough equity in your current home and can qualify for the right financing, a Buy Now Sell Later strategy may allow you to purchase your next home before selling the one you already own.

And that can change much more than the financing.

It can change the entire experience of moving.

The Problem With Selling First

Selling your current home before buying the next one sounds logical.

Until you actually think through what happens next.

Your home sells. You have a closing date. Your equity becomes available.

But where are you going?

Now you're searching for your next home with a deadline hanging over you. If you don't find something in time, you may need temporary housing, storage, two moves or some combination of all three.

And there's an even bigger concern.

You may end up buying a house because you need one, rather than because it's the house you really want.

That's a very different way to shop for a home.

The House You Want Probably Won't Wait for Yours to Sell

There's another problem.

Real estate rarely happens in the perfect order.

The home you've been waiting for might come on the market next week. Your current house might not even be listed yet.

That creates a decision:

Do you let the house go?

Rush to get your current home on the market?

Or make an offer contingent on selling your home?

There may be another option.

With Buy Now Sell Later, we look at whether your current home's equity can help you make the next purchase before the existing property is sold.

That could completely change how you approach your home search.

Your Equity May Be More Useful Than You Realize

For many longtime homeowners, one of their largest financial assets is sitting right underneath them.

Home equity.

Imagine your home is worth $900,000 and you owe $400,000.

On paper, there's approximately $500,000 of equity in the property before selling expenses and other considerations.

The problem is that you can't simply take that equity with you to an open house.

Traditionally, homeowners unlock it by selling.

But selling isn't necessarily the only way to access equity.

Depending on your qualifications and circumstances, we may be able to use a bridge loan, HELOC or another home-equity strategy to access a portion of that equity before the property is sold.

Now the conversation changes from:

"We can't buy until we sell."

to:

"Let's see if we can buy first."

A Bridge Loan Can Create the Missing Link

This is exactly the type of situation bridge financing is designed to address.

A bridge loan can potentially provide qualified homeowners with temporary access to equity from their current property.

That money may help provide funds needed for the next purchase.

Then, after the previous home is sold, the sale proceeds can be used according to the financing plan, including paying off the bridge financing where applicable.

It's not meant to be a permanent solution.

It's designed to solve a timing problem.

You have the wealth. It's just temporarily trapped in the house you're still living in.

A HELOC Can Solve the Problem Differently

Sometimes a Home Equity Line of Credit, or HELOC, may be a better fit.

A HELOC can allow qualified homeowners to borrow against available equity while continuing to own their current home.

This can be particularly interesting for homeowners who already have a low interest rate on their first mortgage.

If you refinanced several years ago or purchased when mortgage rates were lower, you may not want to replace that entire mortgage just to access some equity.

A HELOC may allow you to leave the existing first mortgage in place while accessing a portion of your home's equity separately.

Whether a HELOC or bridge loan makes more sense depends on the numbers.

That's something we can determine before you start seriously shopping.

Your Next Offer Could Look Different Too

Buying first doesn't only solve your moving problem.

It may also affect the offer you make.

Suppose you find the house you want and tell the seller:

"We'll buy your home, but first we need to sell ours."

The seller now has to think about your transaction and the transaction happening behind it.

If something goes wrong with your sale, it could affect theirs.

Now imagine being able to make the same offer without a home-sale contingency.

That's a different proposition.

It doesn't guarantee that your offer will be accepted, and price and terms still matter. But removing a home-sale contingency may reduce uncertainty for the seller.

In a competitive situation, fewer moving parts can matter.

There’s Something Else Buying First Gives You: Time

Time to choose the right home.

Time to move.

Time to get settled.

And potentially, time to prepare the old home properly before putting it on the market.

Instead of living through photographs, open houses and showings, you may already be living somewhere else.

Your Realtor can focus on presenting and marketing the property without coordinating every showing around your family's schedule.

You don't have to pack everything on Tuesday because one closing happens Wednesday and the other happens Thursday.

And you don't have to cross your fingers that nothing gets delayed.

Convenience isn't the reason to make a financial decision, but it absolutely belongs in the conversation.

Maybe the First Call Shouldn't Be “Let's List the House”

If you're thinking about moving, it's natural to assume selling your current home is step one.

Sometimes it is.

But before putting the sign in the yard, there's another question worth asking:

What if we could find our next home first?

If you've built significant equity, there may be ways to put that equity to work without immediately selling the house underneath you.

A bridge loan may be the answer.

A HELOC may be the answer.

Or after looking at everything, selling first may still be the smartest strategy.

That's the point of running the numbers.

Don't sell first simply because you think you have to.

If you're thinking about making a move, give me a call. We'll look at your current home, the equity you've built and where you'd like to go next, and figure out which order makes the most sense.

George Koutsos
Senior Vice President
The Koutsos Team | CrossCountry Mortgage
781-864-0889
george@teamgk.com
NMLS #29613

Loan programs are subject to borrower and property eligibility, underwriting requirements and program availability. Not all borrowers will qualify. Rates, costs and qualification requirements vary by program.