For home sellers, it’s a classic dilemma and at its worst, a stressful juggling act. While selling your current home, you simultaneously try to buy a new one. In the meantime, you have children that need to get situated prior to the start of school, household goods sitting in storage, and buyers pressuring you to move up the closing date.
It’s rare when the timing for the closings of two homes aligns, which means that either you must accept an offer on your home prior to finding a new one or buy a new house before your current one is actually sold. Although there is an option called a contingent contract when one contract is dependent on the other – you agree to purchase a new home but not to close until you’ve sold yours – few sellers will agree to this kind of condition. Plus, there are very few buyers interested in a home who will agree to wait until you find a new property.
When you are selling your home and confronted with the sell first or buy first dilemma – here are 6 strategies that can help:
If you want to accept an offer on your home prior to finding a new house:
Move into a short-term rental home
Short-term rentals can help with timing gaps between a home sale and purchase. It does entail moving twice and possibly putting household goods in storage; however, moving into a rental permits you to sell your home and take longer to find a new one. Renting is also a wonderful opportunity to experience a neighborhood and school system before committing to buying a property in the area.
Book an extended stay hotel
Extended stay hotels can often be booked week-to-week or month-to-month. There are several long-term stay hotels in our area, for example the Homewood Suites in Cranford or Extended Stay America in Parsippany. These facilities typically include ample free parking, laundry facilities, Wi-Fi and a pool for the hot summer months. Often they also offer continental breakfast in the mornings and light hors d’oeuvres on some evenings.
Establish a rent-back agreement
In a rent-back agreement, a seller can stay in a home for a period after the actual sale is completed. During the occupancy period, the new new homeowner becomes the landlord and the seller the tenant. The advantage of a rent-back agreement is it prevents the seller from making two moves, one into temporary housing and then another into a new home.
If you want to buy a new house before your current home is actually sold:
Get a bridge loan
If you buy a new home before your old one is sold, you’ll be faced with carrying two mortgage payments for an undetermined period of time. It can be a significant financial challenge. You will need to determine whether you are able to fund the down payment on your new home without the sale proceeds from the old one. If your income is not sufficient to carry the payments, a bridge loan may help you get through this period when you have payments to make but your available cash is dependent on the sale of your house.
Rent out your current home instead of selling it
If you’re moving but reluctant to sell your home for any number of reasons (market conditions, price, timing), you may have another option – renting. By renting out your current house, you can sustain the costs of owning two homes in the short-term. Being a landlord is not easy, however, and should a buyer for your home come along while it is being rented, you may need to require the tenants to move out.
Build a new home instead of buying
Instead of buying an existing home, contracting for new construction will allow you more time to sell your property. At a minimum, you can plan on 6 months to build a new home and most probably, it will be closer to one year. Don’t forget, however, that you are still committed to close on the new house when it is completed regardless of whether you have sold your current property or not.
If you’re in the market for a new home, an experienced real estate agent can help you navigate the challenges of the sell first or buy first dilemma. For two decades, I have worked through the many challenges of the northern New Jersey housing markets with my clients and would love to assist you. Contact Victoria Carter at (973) 220-3050 or email: firstname.lastname@example.org.