As promised in our previous article (March 2, Hilton Head Sun), this time we will delve into possible solutions to the chicken-and-egg dilemma in real estate. Is it better to sell first, then buy, or buy first then sell?
Here are some considerations.
• Bridge loans: Interim, short-term financing options exist to allow you to borrow funds toward the purchase of your next home while still owning your current home. Taking advantage of exceptionally compelling interest rates right now helps make this an attractive solution.
• Sale-contingency: Placing a contract of sale on your next home contingent upon you selling your current home provides protection so you don’t get caught owning two homes. But not all sellers are compelled by such a contingency, so this takes some strategizing regarding timing, earnest money, and other factors that might make this approach palatable to the seller of your next home.
• Delayed closing: Pushing out the closing date on the contract of your next home (potentially) allows sufficient time for you to sell and close on your current home ahead of that closing date. This requires a high level of confidence that you can sell your current home without any challenges or delays.
• Delayed closing: Equal but opposite to the above scenario, pushing out the closing date on the contract on your current home (potentially) allows sufficient time for you to identify and contract on your next home, so that the respective closing dates align for a smooth transition and move. This requires that you have confidence that enough suitable options for your next home exist that you will be able to buy the new home you want once you find the buyer for your current home.
• Buying-contingency: Accepting a contract of sale on your current home contingent upon you locating and successfully contracting to buy your next home within a certain period. While not all buyers might be excited about their risk in this scenario, the current seller’s-market conditions tend to make this approach more palatable if the contingency period isn’t too lengthy.
• Leaseback: Remaining in your current home after closing, now becoming a long-term renter of the property for a defined period (often months). This “gift of time” allows you the opportunity to take your time in selecting and securing your next home as you have the full term of the leaseback period to shop, contract and move into your next residence.
Which scenario (or some hybrid of any of them) works best depends on a variety of factors such as financial security, market conditions where you are buying, market conditions where you are selling, how your home “shows” currently, timing and move logistics, etc.
Moving residences, and therefore aligning the timing, objectives and needs of the buyer of your current home as well those of the seller of your next home, requires a lot of coordination (often combined with some good fortune).
But somehow, some way, it seems to always work out. And, when the move is done, and you finally get settled in, the other age-old adage always rings true: There’s no place like home!
Chip Collins is the broker-owner of Collins Group Realty firstname.lastname@example.org or collinsgrouprealty.com