Updated: Oct 8, 2022
Should I Buy My Next House Before I List My Current One?
In many areas across the country, homes are selling fast. Depending on the area and the price point, homes are selling within hours. This sounds like a great thing for anyone looking to sell a house. But it can cause quite a dilemma.
Where will you go if your home sells so fast that you don’t have anywhere to move to?
This is actually a real problem. Homeowners are afraid to list their home in case it sells and they can’t find their next home due to lack of inventory. So what can be done if this is you?
Talk with your lender.
Like anyone else looking to buy a new home, you should start by talking to your lender. See what they say about the possibility of buying and find out what you would qualify for. Maybe you can buy a house without having to sell your current one right away. If
you’re someone who has a lot of equity in your current home and you have a stable work history, good credit and a low debt to income ratio, maybe your lender will let you buy a second home. Then you could move into your new home and put your current home on the market once you close. You also want to know what type of loan and what amount you qualify for because maybe that price range isn’t as competitive as others. For instance, maybe there are less buyers in your area looking at homes between $300,00 and $400,000 than there are looking between $200,000 and $300,000. Knowing that you can qualify for $350,000 instead of $250,000 could make a big difference.
Make your offer contingent on selling your current home.
If buying a second home prior to selling your first home isn’t an option for you, you can still consider home shopping. However, you will have to make your offer contingent on the sale of your current home, meaning that the purchase of your new home depends on the sale of your current home. Typically, you’d wait until your current home is under contract before offering on your next home but if you can find a seller that is willing to work with you, you can negotiate the time it takes to list and go under contract on your
home. Sellers can be hesitant to accept these offers because the sale of their home now depends on the sale of your home (and the buyer for it). A hiccup in the sale of your home could cause all the dominos to fall. But you never know.
Explore new construction.
With resale inventory being as low as it is, many homebuyers are going the new construction route. Most builders take 6 to 8 months to build a new home so their timeline is more flexible and forgiving than resale. Most builders and their lender partners are also pretty understanding and knowledgeable in regards to knowing how contingent offers work. In most cases, they’re willing to approve the purchase and begin building on your home months before your home hits the market. Their agents keep tabs on the real estate market so they aren’t worried too much about whether or not you’ll be able to sell your home. And they understand that if your deal falls through, they can just sell that home to someone else.
Moving up during a time of limited inventory can be tough but it can be done. Get with your real estate agent today to talk more about your options before assuming that the time isn’t right for you!