Selling a home and buying a new one can be a difficult balancing act. We have seen several buyers and sellers "caught in between" -- they want to move, but have a home to sell. A homebuyer can take a liking to a home that is for sale, wants to make an offer to buy it, but is hesitant because they have yet to sell their existing home. In an ideal world, both transactions would occur simultaneously.
Buy on contingency: An ideal way to insure against getting "caught in between" real estate transactions is to have a prior-sale contingency included in the purchase contract on the new home. It provides the opportunity to withdraw from an offer if the current home does not sell by a certain date.
Consider whether to buy or sell first: There is still a possibility of getting "caught in between" even with a prior-sale contingency in the purchase contract. Homeowners should consider whether it is better to buy or sell first. It is important to note that most people need to sell their current home in order to qualify for a loan to buy their next home, which is usually more expensive.
Coordinate a lease from the buyer: Many people find themselves in a situation when the sale of the current home has been finalized, but the purchase transaction is still not completed for their new home. One way to bridge the gap is for the seller to lease their current home from the new owner until it is time to move into their new property. An attorney should draw up a lease agreement. Having a lease is effective because it alleviates financial concerns and removes the hassle of having to go to a temporary residence before finally moving into the new home.
Look into renting: The buyer may not always be able or willing to lease back the home, so another option to consider is to rent another property. Although relocating twice is not ideal, renting serves a quick fix and can be a necessary option before moving into that dream home.
Review home equity options: If it is necessary to borrow for a longer period than a few months, the best option is to use home equity, particularly if a sizeable equity has been built up. Options include a fixed-rate home equity loan and a home equity line of credit.
Ray Pugel is the designated broker for Coldwell Banker Bishop Realty. For more information, call (928) 474-2216.