The simultaneous buying and selling of residential property is one of the most common scenarios in real estate. In most cases, if a buyer wants to purchase a new home, they need to unlock the equity in their current residence by selling it.

Normally, the process is fairly straightforward, even if you're unable to close both transactions on the same day.

These, however, are unprecedented times.

The housing markets throughout the country, particularly in Greenwich, Westchester and Boston are hyper-competitive. Homes are under contract as fast as they are listed. Buyers remain out in force despite increasing interest rates and low inventory.

What happens when you run into a roadblock? You've found the home of your dreams, but the sale of your current home isn't keeping pace with your desires.

Let's examine three ways you might approach the situation when you find your dream home, but you must sell your current home first.

Contingency Clause

In more balanced markets, you'd have time to develop a complete game plan with executing concurrent buy-sell transactions. But securing the perfect home in a competitive seller's market means taking on some risk.

Should you make an offer on a new home before selling yours, consider a contingent offer. Ultimately, the contingency expresses your desire to purchase a home should you sell your current residence.

Contingencies based on financing, inspections, the timeframe of a sale, or the need for leaseback are standard practice, but in a seller's maker, they are considerably harder to negotiate. When demand is high, sellers are more apt to avoid them, aiming for the quickest sale.

However, if you want to keep that ideal home within reach, but avoid the dreaded double mortgage, pair an extremely attractive offer with an above-average earnest money deposit. Come to the table with something lucrative for the seller, and they may be willing to wait things out for you.

Alternative Loans

Securing a second home while waiting on another to sell has the potential to upend even the most stable of financial situations. However, if the opportunity to buy your perfect property is too good to pass up, there are loan options worth considering. These include:

  • Cash-out refinance: turn the equity from your existing home into cash
  • Home equity line of credit (HELOC): take out a second mortgage on your current home to access cash
  • Gift loan: receiving a gift from a family member to apply towards a down payment
  • 401(k) loan: take out a loan from your 401(k) 

There are pros and cons to each approach. For example, a refinance may secure you a better interest rate, but a HELOC further leverages your current property and often must be done before you list it to sell. With gifts, if you're financing with a jumbo loan, it cannot be used as the full down payment, only partial.

Speak to a financial advisor or real estate attorney to consider if any of the above options could be right for you.

Partner with an agent who understands the buy-sell scenario

In any of the above scenarios, don't take on more risks than you are comfortable with. Sure, dream homes don't come along every day, but how much will you truly enjoy that house if you overextend yourself trying to acquire it.

Consider first what best suits your needs and financial situation before making any long-term commitment. For assistance navigating the process, partner with an experienced real estate agent. 

Having dealt with many similar buy-sell scenarios in the past, a top agent will help you weigh your options on both sides of the transaction - the pros and cons of buying now or if it's worth waiting until your sale is fully secured. Together, you'll develop a plan that will get you the home you want, sell the home you have, and ensure your home-owning happiness for years to come.

If you're ready to explore the best of Greenwich, New York or Boston real estate and need a trusted partner to help sell your current home and acquire your next residence, contact Mia Watabe today. Look to Mia's years of experience and expertise to be your guide on your real estate journey.



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