Updated: Nov 2, 2020
Selling your house and buying your house at the same time
Selling your home while buying another can be a tricky situation, particularly in our hot market in the Bay Area. Here are some common options when both buying and selling property concurrently:
1. Sell your house first, and then buy another:
This is ideal, as you won’t have the burden of a mortgage, and you’ll have liquid funds available for down payment on your next home. This type of buyer will be able to put a very competitive offer on a home. The down side is that this can be very inconvenient for some people. You may need to rent for a while or live with family until you get can get your offer accepted on the perfect house. This can be stressful on the family.
2. Ask for a rent back:
When you sell your home, your Realtor can negotiate a “rent back” with the buyer. Typically, a rent back is less than 29 days, and is a simple one-page contract that states that the seller will remain in possession of the property following the sale for the agreed upon amount of time. If the rent back is negotiated for over 29 days, it then becomes a lease agreement, and the seller then leases and pays the new owner rent every month for the agreed upon amount of time. Short rent backs are common; however, a longer lease agreement may be more difficult to get the new buyers to accept. If you’re a flexible buyer and are confident you can find a home to purchase in a short amount of time, this may be a good plan for you.
3. Contingent Purchase:
This involves placing an offer on a home that is contingent upon the sale of your current home. In markets like the Bay Area, this choice will make it very difficult for you to beat out the other buyers’ offers. However, if the property has been sitting idle without offers, or the seller is in no rush, it is an definitely an option.
4. Get a Bridge Loan:
This is a short-term loan that allows a seller to utilize equity in their home to use as a down payment on new home, before their current home is sold. The maximum amount one can borrow may be a percentage of your current and future home’s value. You should speak to your lender about this option as each lender may have different requirements and policies regarding this product.
Contact me if you'd like me to break down each option further so you can decide which is right for you.