What Is a Buy Before You Sell Program? How to Make a Seamless Move
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Richard Haddad Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
It’s often called the buy-sell home conundrum. It’s the dilemma of needing to buy a new home before selling your current one so you know you have a place to live — and you only want to move once. However, most Americans need the equity and sale proceeds from their current home to buy a new home. One solution is the modern “Buy Before You Sell” program.
A Buy Before You Sell (BBYS) program, is an innovative option tailored for home shoppers facing this real estate Catch-22. In this guide, we’ll give you an overview of BBYS programs, providing you with expert insights to help you decide if this option is right for you.
Yes, You Can Buy Before You Sell. Why Move Twice?
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
What is a Buy Before You Sell program in real estate?
In the realm of residential real estate, a Buy Before You Sell program is a game-changer for homeowners looking to transition into a new home. It’s an integrated service approach that allows you to secure your next home before selling your current one.
Max Folkers, a certified HomeLight Buy Before You Sell agent says this program option removes much of the anxiety and headaches associated with the old ways of trying to logistically, emotionally, and financially balance a family move.
“The benefit to that is you don’t have to worry about all the timing associated with both selling and buying simultaneously, and it just gives a lot more flexibility,” Folkers explains.
Here are some of the benefits you can expect with a Buy Before You Sell program:
- Stress reduction: It eliminates the stress of timing your sale and purchase perfectly.
- Financial flexibility: Offers a financial cushion, so you’re not pressured to accept a below-market offer on your current home.
- Seamless transition: Ensures a smoother move from your old home to your new one, without the need for temporary housing.
- Market advantage: Gives you the upper hand as a buyer in competitive markets, enabling you to make an offer without a sale contingency.
- Peace of mind: In a high-interest-rate, low-inventory housing market, you can have confidence that you’ll have a place to live before selling your existing home.
How does a Buy Before You Sell program work?
The mechanics of a Buy Before You Sell program are straightforward yet impactful. These programs allow homeowners to tap into their home equity quickly and use the funds for a down payment on a new home, all with the assistance of experienced real estate professionals who guide the entire process.
“Buy Before You Sell works because it enables you to purchase a home while still staying in your current home, and it frees up the equity from your current home to be able to make that purchase,” Folkers, says.
Here’s a step-by-step breakdown:
1. Program enrollment: You enroll in the program, typically through a real estate company or agent offering the service.
2. Home selection: Start searching for your new home. Some programs provide tools or assistance to find the right property.
3. Financial arrangements: These programs use a portion of the equity from your current home to help you purchase a new home before selling your old one.
4. Purchasing the new home: With the program’s backing, you make a strong offer on your new home without a home sale contingency and proceed with the purchase.
5. Selling your old home: After moving into your new home, you sell your old property. Many Buy Before You Sell programs offer assistance in home preparation, marketing, and selling.
6. Settling finances: Upon selling your old home, you settle any outstanding balances or loans taken as part of the program. These services typically give you any remaining equity after your home sells.
The real estate companies that provide these seamless services have various fee structures. Folkers, who works with 85% more single-family homes than average agents in his San Diego market, believes that for most buyers and sellers, the money and time you save more than balances out the fees.
“It does cost a little bit. But in my experience, in the times my clients have used it, the ability to purchase, move out, and then prepare their home for sale has more than made up for the program fees,” Folkers says.
This approach provides a streamlined and less stressful way of transitioning between homes, ensuring you don’t miss out on your dream home while waiting to sell your current one.
How does a BBYS program help my home sale?
“Not only does a Buy Before Your Sell program give you flexibility in buying your next home, but your current home is largely going to sell better,” Folkers says, noting that it gives you unrushed time to prepare and improve the home. “Whether that’s just a thorough cleaning and a staging, or whether it’s updating paint and flooring. These are things that you can’t do as well while you’re actively living in the house.”
Sell for up to 13% more
A recent HomeLight survey of more than 1,000 top real estate agents across the nation found that unoccupied, well-staged homes can sell for up to 13% more. For example, an unstaged home might sell for $450,000, but if you moved out and more effectively prepared and staged the home, it could sell for an additional $58,500.
“If you take that into account, I think somebody using Buy Before You Sell is going to net more than they would without the program, and with the benefit of all the convenience,” Folkers says.
In addition, with a Buy Before You Sell program, you typically only have to move once, saving you even more money from moving and temporary housing costs.
Examples of Buy Before You Sell companies
The real estate market has seen a rise in companies offering Buy Before You Sell programs, each with unique features and services. These companies aim to simplify the process of buying a new home before selling your current one.
Below is a list of a few notable companies in this space. Keep in mind that products and services can change. Check the company websites for the most current fees and program details.
HomeLight Buy Before You Sell
HomeLight’s Buy Before You Sell program simplifies your transition to a new home with a 3-step process: apply, buy, and sell. You can apply in minutes with no commitment to see if your home is a good fit for the program. HomeLight’s near-instant Equity Unlock Calculator lets you estimate how much equity the program can unlock from your current home. You can get started yourself, or ask your agent to start the process for you. Then you can submit a competitive offer on your new home with no home sale contingency. After you move into your new home, HomeLight will list your unoccupied home on the market to attract the strongest offer possible. You’ll receive the remainder of your equity after your home sells.
Cost: It’s free to get started and see how much equity you can unlock. If you decide to transact using the program, there is a flat fee of 2.4% of the departing residence home sale.
Locations: HomeLight partners with top agents across the country to provide Buy Before You Sell services in most U.S. cities.
HomeLight was founded in 2012 and has an accredited A+ rating with the Better Business Bureau. The company has earned a 4.8-star Google Review rating from reviews submitted by hundreds of past clients, such as Hunter W. and Angela B. of Sunland, California, who said: “We not only had the advantage of moving into our new home before listing our old home but also were able to sell for more than expected [$159,000 over asking price].”
Website: homelight.com/buy-before-you-sell
Phone: 855-999-7971
Knock Bridge Loan
The Knock Bridge Loan program is touted as “a bridge to a mortgage” for homeowners looking to buy before they sell. As described on its website, the program “makes you more attractive to lenders and sellers, giving you greater certainty and convenience” and “Knock enables you to use the money ‘tied up’ in your current home to purchase your next one.” Knock works with buyers, sellers, agents, and lenders to help homeowners build a buy-before-you-sell bridge to a new home.
Cost: Knock provides the following single-payment loan cost example on their website FAQ page: a $150,000 bridge loan with an APR of 2.485% would be repayable in a single payment of $151,850 on the maturity date.
Locations: Knock currently serves customers in 19 states, including AZ, CA, CO, DC, FL, GA, IL, MD, MI, MN, NJ, NC, OH, OR, PA, SC, TN, WA, and WI.
Despite not being listed as BBB accredited, Knock boasts a commendable non-accredited rating of 4.56 out of 5 stars. One content customer highlights the company’s exceptional service and seamless home-swapping process. The reviewer praises Knock’s professionalism and finds the experience remarkably easy.
Website: knock.com
Phone: 866-996-1695
Orchard Move First
Formerly known as Perch, Orchard provides a program called Move First that lets clients buy and get settled into their new homes before they sell their old houses. Orchard’s website describes the process as: unlock your equity, make a non-contingent offer, move once, and skip the showings and the stress. Since 2017, Orchard has been helping sellers make stronger offers by allowing them to unlock their home value upfront to put toward their next home.
Cost: On its website, Orchard explains that the Move First program typically costs 6% of your home sale plus a 2.4% program fee.
Locations: The Orchard Move First program is currently available to sellers in the metro areas of Atlanta, Austin, Dallas-Fort Worth, Denver, Houston, and San Antonio. They serve homebuying customers in the following states: AZ, CA, CO, FL, GA, KS, NC, OK, OR, PA, SC, TN, TX, and WA.
Orchard is a BBB-accredited company and holds an A+ rating. They currently have a 3.17 out of 5 stars. They facilitate home sales and purchases, catering to various markets. A satisfied client describes their professionalism, recounting the swift contract placement of their house within four days during a buyer’s market and impending recession. The client attributes this success to Orchard’s team expertise, highlighting their profound impact.
Website: orchard.com
Phone: 844-515-9880
Flyhomes
Founded in 2016, Flyhomes is a real estate technology company that is working to transform the homebuying and selling experience. Flyhomes has helped over 10,000 homeowners buy and sell their homes. The company describes its service as a “radically different way to buy and sell your home” by incorporating its “Cash Offer” (like a short-term loan) option and using real estate agents trained in their program. Their affiliate lender, Flyhomes Mortgage, will work with your Flyhomes Agent to get your offer accepted on a home you love.
Cost: Costs depend on the services you use. Flyhomes does not charge a traditional sales agent commission, but clients will need to pay the buyer’s agent commission (typically 2.5%-3% of the home sale price), any applicable taxes, and the cost of any repairs if required. There are no origination fees for using a Flyhomes Cash Offer product provided by the company’s lender affiliate, Flyhomes Mortgage.
Locations: Flyhomes serves buyers and sellers in California, Oregon, Washington, Colorado, Texas, and Massachusetts.
Flyhomes is a BBB accredited company with an A+ rating. They have a Google review rating of 4.7 out of 5 stars. One customer notes that clear guidance was provided every step of the way in their real estate transaction. Another customer highlights Flyhomes’ professionalism, knowledge and dedication to being able to help their clients.
Website: flyhomes.com
Phone: 855-935-9466
Homeward
Homeward’s Buy Before You Sell program lets clients move now and sell later. Homeward works to provide a bigger window to sell your house for the best price, along with an offer that gets you into your new home faster. You can move and settle into your new home right after closing. Then, after you sell your house, you essentially buy your new home back from Homeward. Homeward also buys homes for cash.
Cost: About 1.9% of your home sale price is the typical fee charged by Homeward, according to information listed on the website. Depending on the buying scenario, fees can sometimes be rolled into the new mortgage to reduce or avoid out-of-pocket expenses.
Locations: Homeward serves buyers and sellers in Arizona, Colorado, Florida, Oregon, Georgia, Washington, and Texas.
Homeward does not appear to be BBB accredited but holds an A+ non-accredited rating. On Trustpilot, the company has a rating of 4.4 out of 5 stars. Google reviewers give Homeward a high 4.7 rating. One satisfied client describes the process as seamless and stress-free, with all their questions about the process answered in a timely manner. Another client notes how easy the process was, allowing them to close within seven days.
Website: homeward.com/buy-before-you-sell
Phone: 512-956-5087
Each company has its own approach to facilitating the BBYS process, aiming to ease the stress and financial strain of buying and selling simultaneously.
“If you’ve got a lot of equity in your home and you’re downsizing, a BBYS program enables you to possibly purchase your next home for cash,” Folkers says. “Or, maybe you don’t have a lot of income; the program can let you use your equity for a large down payment on your next home, which enables you to qualify for a new home.”.
As you explore these and other options, consider how their specific services align with your individual homebuying and selling needs. HomeLight suggests you consult with your financial advisor before committing to a Buy Before You Sell program or any purchase options that require financing.
How Much Is Your Home Worth Now?
Home values have rapidly increased in recent years. How much is your current home worth now? Get a ballpark estimate from HomeLight’s free Home Value Estimator.
What makes HomeLight Buy Before You Sell different?
“HomeLight has always been at the forefront of empowering agents with innovative tools,” says Brian Sloss, director of product management at HomeLight. “We provide personalized BBYS webpages with a near-instant tool called an Equity Unlock Calculator so top agents across the country can better serve their clients and streamline what used to be a complex process.”
Sloss explains that HomeLight’s Equity Unlock Calculator is at the heart of the Buy Before You Sell Program.
“You can quickly look at how much equity you’ve built up in your home. For example, you can unlock 75% of the equity to put toward the purchase of your next home right away, “ he says. “That is the core mechanic of what Buy Before You Sell is all about. The calculator that we built is able to estimate within a pretty narrow band how much we would be able to unlock for you if you were to go through the program.”
HomeLight also offers other real estate solutions for buyers and sellers, such as its highly-rated Agent Match platform to find top real estate agents, and Simple Sale, a convenient way to receive a no-obligation, all-cash offer to sell your home in as little as 10 days. Unlike other services, HomeLight’s all-cash offers also show you what you might receive if you partner with a top agent, and we provide the names of some of the nation’s best agents in your city.
FAQs about HomeLight Buy Before You Sell
The amount of equity you can unlock is determined using our proprietary algorithm, which takes into consideration an estimation of the home’s value, current market conditions, projected market risk, borrower financials, outstanding loans, and more. You’ll then be eligible to receive a loan to unlock a portion of the overall equity you have in your home upfront through HomeLight Home Loans, Inc., prior to selling the home — and will receive the remainder of your equity after the home sells, less transaction and program fees.
Not a problem! We consider all properties for the program regardless of days on market, and will adjust the Equity Unlock Amount according to your property’s risk profile.
HomeLight partners with top agents nationwide to make buying and selling a home simpler, more certain, and satisfying for all. If your current home doesn’t sell within 90 days of the closing of your new home, HomeLight will buy the property and continue to work with you and your listing agent to sell it. Any profits from the sale, after deducting HomeLight’s incurred costs, will be distributed to the client.
You can use your Equity Unlock Amount for more than just a down payment on your new home. You can also use it for moving expenses, closing expenses, property repairs, and more! Contact us to find out more details.
Is a Buy Before You Sell program right for you?
If you’re a homeowner facing the buy-sell home conundrum, a Buy Before You Sell program may be the solution you need to move forward.
“Buy Before You Sell programs never existed before,” Sloss says. ”And when you have an innovative new product like HomeLight BBYS and our easy Equity Unlock Calculator, the challenge is ‘How do we help people understand what it is and why it’s valuable to them?’”
Sloss offers this simple invitation to know if BBYS is right for you: “If you’re interested, or if you just want to learn more about the program, the best thing to do is submit your property address and see what the estimated equity unlock range is — see if that’s enough equity for you to be able to go purchase the type of home that you want. If it is, then it probably makes sense for you to go and get approved for Buy Before You Sell.”
He shares these key takeaways:
1. Convenience and flexibility: BBYS programs offer a stress-reducing solution, enabling you to buy a new home before selling your current one.
2. Financial and professional support: These programs typically come with financial backing (like bridge loans), and guidance from real estate experts who can help you on both sides of the buy/sell process.
3. Market advantage: Being able to purchase without a sale contingency puts you in a stronger position in competitive real estate markets.
4. Personalized options: Different companies offer varied BBYS services, each tailored to meet diverse homeowner needs.
5. Streamlined transition: BBYS programs aim to simplify the transition between homes, making the process smoother and more manageable.
Every home buying and selling journey is unique. Evaluate the BBYS options available to you, considering your specific circumstances and needs. HomeLight can help you make informed decisions, ensuring a smoother transition to your new home.
Header Image Source: (Robert Bye/ Unsplash)
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