Almost every time I meet with homeowners who are thinking about moving, we get to the same question within the first few minutes: “So where do we live in between?”
Most people are picturing one of two things. They buy first and get stuck paying two mortgages for months, or they sell first and end up with everything they own in a storage unit while they figure it out. Nobody wants either one.
I’ve helped a lot of sellers through this, and the way we handle it depends on which options you actually have. I usually start by figuring out which of these fits you best:
- Can you pay cash or qualify for the new home without selling your current one?
- If not, can you use a bridge loan or a smaller down payment to buy first, and then use the equity from your current home once it sells?
- Or do you need to sell your current home before you can close on the next one?
There’s a way to make each of these work, and I’ve walked sellers through all three many times.
A recent example
Not long ago I worked with a couple who had been in their home for 15 years. The kids had moved out, and they were ready for something new. Specifically, a house with a pool.
They were able to qualify for the new house without selling their current one. But they didn’t love the idea of owning two homes if theirs sat on the market longer than expected. So when they found the one they wanted, we still wrote the offer contingent on selling their current home. To make it more appealing to the seller, we negotiated a 48-hour first right of refusal. If the seller got another offer, my clients would have 48 hours to either remove their contingency or step aside.
Their house went under contract, and they closed on the new one a week before closing on the old one. That meant they could move over a few days instead of cramming it into one weekend.
They never ended up needing the contingency. But having it there gave them options and took a lot of the pressure off while their house was on the market.
If you can buy before you sell
This is the simplest situation. If you can pay cash, or your income is enough to qualify for the new mortgage while you still own your current home, you can buy first and sell afterward.
You can write an offer without a home sale contingency, which sellers love, and you can move on your own timeline.
When it comes to selling your current home, you have a choice. We can wait until you’ve moved out and show it vacant, or we can list it while you’re still living there. If we go that route, we get it under contract and set a closing date that gives you time to move before you have to hand over the keys. Which one makes more sense depends on your house and your schedule, and we can talk through that together.
Either way, you will be carrying two homes for a bit, so think about how long you’d be comfortable doing that.
If you need your equity to buy first
A lot of sellers have good equity in their current home, but it’s tied up until the house sells. There are a few ways around that.
A bridge loan or home equity line lets you borrow against your current home so you can buy before it sells.
Another option is to close on the new house with a smaller down payment and then recast the loan once your current home sells. You put the rest of your down payment toward the new mortgage, and the lender adjusts your payment and amortization schedule based on the lower balance. Your interest rate and loan terms don’t change. Not every loan can be recast and there may be a fee, so ask your lender about it early.
Some lenders and companies also offer buy-before-you-sell programs made for this exact situation. They come with fees, so it’s worth comparing them against a bridge loan.
Whichever route you’re considering, talk to a lender before you start looking at houses. I work with a few local lenders who are really good at this, and I’m happy to connect you.
If you have to sell first
This is where a lot of sellers end up, and you still have more options than you might think.
You can write an offer on the next house that’s contingent on selling yours. A couple of years ago, most sellers in Omaha wouldn’t even consider that kind of offer. Now that there are more homes on the market, a lot of them will, especially if your house is already listed, priced well, and getting showings. Offering a first right of refusal, like my clients did, can help too.
You can also go the other direction and list your home with a clause in the purchase agreement that makes the sale subject to you finding suitable housing within a certain number of days. That buys you time to find your next place once you know your house is sold. Some buyers won’t love that clause, so pricing and presentation matter even more.
If the timing lines up, you can close on both homes the same day. Sell in the morning, buy in the afternoon, and the money from one goes right into the other. It takes a lot of coordination between the lenders and the title company, and I always like to have a backup plan in case one side gets delayed.
Something people don’t always realize is that the standard purchase agreement has possession happening at closing. If you need a little more time on either end, it has to be negotiated in the contract. You might ask the seller of your new home to let you move in a few days early (pre-occupancy), or ask the buyer of your current home to let you stay a few days after closing (post-occupancy) so you can finish moving and get the house cleaned.
If none of that works, a short-term rental, furnished apartment, or a few weeks with family can bridge the gap. Plenty of my clients have done it, and most of them were glad they didn’t rush into a house they weren’t sure about.
Some sellers also ask to rent their home back from the buyer for a few weeks after closing. Honestly, in today’s market we aren’t seeing buyers agree to that very often. It doesn’t hurt to ask, but I wouldn’t build your whole plan around it.
Where I start with sellers who are also buying
Before we list your house or look at a single home, I want to get a few things done:
- Talk with a lender so we know which of the three situations you’re in
- Put a realistic price on your current home, so we’re not planning around a number that won’t hold up
- Get your house ready to list, so if the right home pops up, we can move
Once we have those pieces, the rest of the plan comes together a lot more easily.
Thinking about a move?
If you’re trying to figure out how this would work for your family, let’s sit down and talk it through. We’ll figure out which situation you’re in and put together a timeline that makes sense.
Megan Bengtson | Apex Group | PJ Morgan Real Estate