How To Buy a Home Before Selling Yours

By Jason Giulieri

Jason, originally from the sunny Australian coast has lived in New York for over a decade. He has more than 20 years experience as a real estate investor with expertise in residential rentals; single family and multi-family renovations; and sales. Jason has extertise serving a varied clientele including first time home buyers, those up or downsizing and investors seeking to grow their portfolio.

In today’s real estate market, the pressing question on many sellers’ minds is how to go about acquiring a new home before selling their current one. It’s a dilemma that many face, but fear not, as there are several viable options to explore. Today, we’ll discuss four methods to help you navigate this challenging situation.

1. Contingent offer. One of the most common approaches is making a contingent offer. This involves writing a condition into your purchase contract that states your offer is dependent on the successful sale of your current home. If your current property doesn’t sell within the agreed-upon timeframe, you have the option to back out of the purchase offer. Fortunately, this often comes with no adverse consequences. In a competitive market with limited inventory, potential buyers may be willing to accept this contingency to secure your home for themselves.

2. Bridge loan financing. For those who prefer a different route, bridge loan financing can be a valuable solution. A bridge loan is a short-term, higher-interest loan that uses your existing home as collateral. This loan allows you to purchase your new home while awaiting the sale of your current one. Once your current home sells, you can use the proceeds to pay off the bridge loan. To minimize interest costs, try to align the closing dates for your buying and selling transactions.

3. Home equity line of credit. If you have significant equity in your current home, consider taking out a home equity line of credit (HELOC). This financial tool can help you complete the purchase of your new home while your current home remains on the market. Once your current home sells, use the proceeds to pay off the HELOC. This method provides a smooth transition without the pressure of rushing into a new purchase.

4. Cash offer programs. In recent years, innovative cash offer programs have emerged as a way to make competitive cash offers on your next home before selling your current one. These programs aim to prevent the burden of paying two mortgages simultaneously or making a contingent offer. Keep in mind that these programs have specific requirements and conditions for eligibility, but they can be a game-changer in certain situations.

There’s no one-size-fits-all solution when it comes to acquiring a new home before selling your current one. Your choice should align with your financial situation, real estate market conditions, and personal preferences. If you’re uncertain about which option is best for you, don’t hesitate to reach out to us by phone or email. We can guide you through these options and help you make an informed decision tailored to your specific needs.