If you’ve been in your home for 3+ years, you’ve probably benefited from a nice bump in your home’s value. And you may be thinking, now is a great window of opportunity to cash out and upgrade your home. Or if you’re an empty nester, downsize to something more manageable. The traditional method of moving for current homeowners would have been to use a home sale contingency in your offer, meaning your offer depends on you selling your home first in order to buy your next home. However, in this super competitive seller’s market, buyers are submitting not only the highest price but also the lowest amount of contingencies. So yes, while it’s a fantastic time to sell, once your home is sold all of a sudden you’re sitting on the other side of the table as a buyer. You most likely, don’t want to sell to only become homeless. So what options do you have? Luckily, I’ve got some ideas for you to explore.
- Buy your next home first, before selling your current home. This might be easier said than done for many. This would require your income to be high enough to be able to support both mortgages at the same time along with all your other current debt. Perhaps your income has increased through a promotion at work, switching careers, or gained a second income through a side hustle or a spouse after getting married. If any of these apply to you, it may be possible to qualify for another mortgage without having to sell your current home. You can verify by speaking to a lender and applying for a pre-approval to find out if you can get purchase another home without selling your current one first. This would be one of the easiest and clear-cut strategies if you can qualify.
- If you’re not able to qualify for a new mortgage while carrying your current mortgage. You may be able to utilize a unique type of loan known as a bridge loan to purchase your new home first. This strategy requires your home to have some equity. A lender can give you a bridge loan which is a temporary short-term loan based on the equity in your home. You would use that bridge loan as your source of downpayment to secure your next home. After you buy your new home, then you would sell your old home to pay off both your bridge loan and the remaining mortgage balance on your old home. This strategy offers the advantage of being able to buy a home without having to use a home sale contingency in your offer. This means, your offer is not relying on you to sell your home first before you can commit to buying the seller’s home. As stated above, in this market the fewer contingencies your offer has, the more attractive it is for sellers.
- Friends or family, if you’re lucky enough to have any friends or family that can temporarily accommodate you while you secure your next home. That could be a short-term solution allowing you to comfortably conduct your home search. If needed, you could put the majority of your belongings in storage until you find your next home.
- Rent, the next best solution, preferably a month-to-month lease if possible to give you the flexibility to terminate once you’ve secured your new home. Alternatively, you could try negotiating with a short-term rental (AirBnB) owner for a discounted one-month booking. Worst case scenario, you lock in a traditional 1-year lease and hope the market shifts to become more favorable to buyers.
- Post-closing occupancy. This speaks to how strong of a seller’s market we’re currently in. Some sellers are flat out telling buyers in that a potential buyer must agree to allow the sellers to stay after closing for “X” amount of time. Sellers could offer to pay “rent” to the buyer if they choose to. It could be 1, 2, 3…6 months, I’ve even seen in some markets sellers are asking to stay through the entire 2021!!! In this crazy competitive seller’s market, there are buyers out there who are more than willing to agree to let you stay as long as you need until you find a home, even for free.
So there’s five great strategies that you can use to plan your next move after selling your home. Hopefully, you can utilize one of them to help you make your next move. If you should have any questions or comments, let me know.