Question:
“We’re ready for a bigger house, but I don’t know how to go about this. I don’t want to sell mine until I’ve got another one, but I have to sell to get the money to buy the next one. How do people do this?”
Answer:
I hear this question all the time. Let’s consider all the options
- Buy non-contingent
- Buy contingent, then sell
- Sell contingent, then buy
- Sell non-contingent with rentback, then buy
- Sell non-contingent, move out, then buy
OPTION #1: Buy Non-Contingent
Buy a home, then sell yours. You can do this if:
A. You already have down payment money for a new home
B. You can find the money, possibly as a gift from family
C. You borrow against your home for the down payment
OPTION #2: Buy Contingent, Then Sell ***Worst Option***
Do the fun part first. House hunt and find a home, offer contingent on your home selling, get it accepted, then sell your home. Downside: Sellers hate contingent offers! So you pay a premium to get a seller interested, then you rush to sell your home, probably for less money.
OPTION #3: Sell Contingent, Then Buy
“Scout” the housing market. Like what you see? Then list your home contingent on buying a home. Once you have a buyer, find the home you want and offer contingent on your home sale closing. Then close both transactions.
OPTION #4: Sell Non-contingent With Rentback, Then Buy
Sell your home with a rentback period, then buy contingent on your closing. The rentback gives you some time to close on your new home. But you may have to move out & rent if it takes too long to complete a purchase.
OPTION #5: Sell Non-contingent, Move Out, Then Buy
Don’t mind a double move? Sell your home non-contingent, then buy. If you’re lucky, once your home is in escrow you’ll find a home and close both at the same time and avoid a double-move.
All these options have risks if not handled 100% correctly. A family I know did #3, but their agent messed things up. They were forced to sell and move out even without having a home to move to. They ended up renting for 7 years! Also, the standard contracts contain dangerous language for Options #2 & #3.
If you’d like to sit down and discuss your needs, determine your best option, and how to make it happen, call me at (858)457-KENT (5368).
