Can You Put an Offer on a House Before Selling Your Current Home?
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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.
Most Americans need the equity and sale proceeds from their current home in order to buy a new home. But you also want to start shopping for a home so you have a place to live when your house sells. Herein lies the buy-sell predicament: Can you put an offer on a house before selling your current home?
This common question plagues many homeowners who fear the timing and financial implications of such a decision.
In this blog post, we’ll explore the possibilities and strategies for making your next big move with confidence. We’ll break down the pros and cons of buying before selling and introduce some innovative solutions that can ease this transition.
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.
Can you put an offer on a house before selling?
The short answer is yes, you can put an offer on a house before selling your current home. This strategy is not uncommon in the real estate world, especially for homeowners who find their dream property before they’ve managed to sell their existing one. However, pursuing this path requires careful planning and consideration of your financial situation and your use of solution resources.
Success can depend on the state of the real estate market, the property you’re selling, your financial resources, and the flexibility of your buying and selling timelines
It’s important to evaluate your ability to carry two mortgages, should it come to that, or to explore financing options such as bridge loans, home equity lines of credit, or specific programs designed to help buyers in this exact situation. Read on for details about your “buy before you sell” options.
Is it better to buy or sell first?
The decision to buy a new house before selling your current one involves weighing various factors. Each option comes with its own set of advantages and disadvantages. Below are some of the key considerations that can help you make a choice that fits your financial situation, timeline, and personal preferences.
Benefits of buying a house before selling
- You have a home to move to: Buying first means you can move into your new home at your own pace without worrying about the gap between selling your old home and finding a new place to live. This can be especially helpful if you’re making a long-distance move or moving an entire family.
- You can save money: If you buy first, you avoid the path of: sell, move, rent, buy, and move again. You won’t need to move twice or pay temporary housing costs, including deposits and utility hookups.
- You can gain a market advantage: In a competitive market, being ready to buy immediately can be a significant advantage, allowing you to secure your dream home without having to rush the sale of your current property.
- You have time to prepare: Having both properties for a period allows you to make any necessary repairs or improvements to your current home, potentially increasing its market value.
- You won’t be living in an “open house”: Buying first means you do not have to live in a house while it’s being shown to potential buyers.
- You feel more certainty and peace of mind: Knowing where you’re moving to can provide emotional and logistical stability, especially important for families with children or individuals with specific needs.
Staged homes sell for more
A recent HomeLight survey of more than 1,000 top real estate agents across the U.S. found that well-staged, unoccupied homes can sell for up to 13% more. For example, an unstaged home might sell for $600,000, but if you moved out and more effectively prepared and staged the house, it could sell for an additional $78,000.
Drawbacks of buying a house before selling
- You can suffer financial strain: Holding two mortgages at once can be financially challenging. You’ll need to ensure you can afford this situation in the short term.
- You might face a market risk: If the market conditions change unfavorably, you might find yourself selling your current home for less than anticipated, affecting your financial plans.
- You may feel pressure to sell quickly: Owning two homes can create pressure to sell your current home quickly, potentially leading to accepting a lower offer than you might otherwise.
- You’ll need to reassure sellers: When shopping for your new home, sellers may be hesitant to receive an offer from a buyer who still has a home to sell. They might think your unsold home will impact your ability to follow through on your bid.
- You could be up against complicated qualifications: Securing a mortgage for a new home when you already have one can be more complicated. Lenders may require higher income levels and better credit scores to mitigate their risk.
How do I buy a new home before I’ve sold my old one?
Taking the leap to buy a new home before selling your current property can seem daunting, but this is not a new proposition. There are several proven strategies to make it happen. Here’s how you can buy a home before selling your old one:
- Home equity loans: If you have substantial equity in your current home, you can take out a home equity loan or line of credit. This can provide you with the funds needed for the down payment on your new home, essentially leveraging the value you’ve built up in your current property. For downsizing longtime homeowners, your equity may be enough to pay for your new home outright.
- Bridge loans: Bridge loans are short-term financing options designed to bridge the gap between the purchase of your new home and the sale of your old one. These loans can be used for the down payment on your new property, but they typically come with higher interest rates and fees.
- Make a cash offer (if you have the means): If you’re in a financial position to do so, making a cash offer on a new home can be very appealing to sellers and put you at a competitive advantage, especially in a hot market.
- Make a contingent offer: You can make an offer on a new home that’s contingent upon the sale of your current home. While this can make your offer less attractive to sellers in a competitive market, it’s a safer option that ensures you won’t be stuck with two mortgages.
- Use a Buy Before You Sell program: Some real estate companies offer programs specifically designed to help you purchase a new home before selling your current one. These programs provide temporary financing or other solutions to facilitate the transition without the immediate need to sell your existing property.
What is a Buy Before You Sell program?
A Buy Before You Sell program is a specialized service offered by modern real estate solution companies like HomeLight. They are designed to alleviate the stress and financial pressure of having to sell your current home before purchasing a new one.
These programs make it possible for homeowners to easily tap into their existing home equity and use the funds for a down payment on a new home, all with the assistance of knowledgeable real estate professionals who simplify and guide the process from start to finish.
Here’s how it typically works:
- Financial solutions: The program may offer a short-term loan or other financial arrangements to cover the down payment and possibly other expenses related to purchasing the new home. This enables homeowners to proceed with buying a new property before their current one is sold.
- Home sale assistance or guarantee: Alongside financial support, these programs often include services to help sell your current home. This might involve marketing the property, staging it for showings, or even guaranteeing a sale within a certain timeframe at a predetermined price.
- Flexibility and peace of mind: By removing the immediate need to sell your home before buying a new one, these programs offer flexibility in moving dates and reduce the risk of having to make rushed decisions or accept lower offers just to facilitate a purchase.
- Ability to make a stronger offer: With the backing of a buy before you sell program, you can make a strong offer on your new house without the need for a home sale contingency clause.
- Streamlined process: Many of these programs are designed to streamline the buying and selling process, offering integrated services that can include everything from financing to closing. This can significantly reduce the hassle and complexity typically associated with real estate transactions.
Here’s how HomeLight Buy Before You Sell works:
Contact HomeLight to get started today, or ask your agent how HomeLight Buy Before You Sell can provide you with a smoother, contingency-free purchase experience.
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.
Is a Buy Before You Sell strategy right for you?
From leveraging home equity and bridge loans to making contingent offers or modern Buy Before You Sell programs, the right choice depends on your personal circumstances, financial situation, and the current real estate market.
If you’re feeling overwhelmed by the prospect of juggling two properties or securing financing for your next home purchase, remember that there are resources designed to help you navigate this journey.
HomeLight can help
HomeLight’s Buy Before You Sell program offers a seamless solution, providing the financial flexibility and support needed to make your move without the pressure of a quick sale. For those looking to maximize their sale price and find the perfect next home, HomeLight’s Agent Match platform connects you with top real estate agents in your area, ensuring you have expert guidance every step of the way.
Whether you’re upsizing, downsizing, or just looking for a change, taking the leap to buy a new home before selling your current one is a big move — but it doesn’t have to be a leap of faith.
Header Image Source: (Joshua Case/ Unsplash)
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