The “Catch-22” of Real Estate: Should You Buy First or Sell First?
If you are looking to upgrade, downsize, or simply change neighborhoods in Anne Arundel County, you are likely facing the biggest fear in real estate: timing.
If you buy your new house first, you risk carrying two mortgages. On the other hand, if you sell your home first, you risk having to move into a short-term rental or scrambling to find a new house in a competitive market.
It feels like a Catch-22, but it doesn’t have to be. As an experienced real estate agent in Pasadena, MD, I help clients navigate this exact scenario every single month. With the right strategy, you can seamlessly transition from one door to the next.
6 Ways to Buy a Home When You Need to Sell First
1. Buy Non-Contingent
With this option, the buyer would qualify to carry two mortgages at once and wouldn’t need to sell their home in order to buy a new one. This can be a great option for people who want to move quickly, and can afford the extra payments in holding costs. However, you may not qualify for as much of a loan carrying two mortgages.
2. Buy Contingent
Find a seller who is willing to let you sell your home first. In a seller’s market, this can be difficult to find, because there are usually plenty of other buyers able to buy without this contingency. The biggest downside to this option is that it is more risky for the seller, so they will often only accept this type of offer if the buyer is willing to pay a higher price or offer other concessions.
3. Temporary Housing
Sell your home and move into temporary housing with family or a rental property. This gives you the most flexibility when it comes to finding your next home. The downside is that you may have to move twice and pay for two sets of moving expenses. Short-term rentals can be hard to find and more expensive.
4. Rent Back
Use a post-settlement occupancy agreement to sell and stay in your home for up to 60 days. This gives you time to find a new place and move without the stress of having to do it all at once. You’ll also need to pay rent during this period, which is typically calculated as a per diem amount based on the buyer’s mortgage, plus a security deposit. Rent back agreements are negotiable, so be sure to talk to your real estate agent about this strategy.
5. Landlord
Rent out your home and use the rental income to offset your mortgage. Holding on to real estate as an investment can be a great strategy for building long-term wealth. This option can be challenging, as you’ll need to coordinate the closing on your new home with the lease agreement of your new tenants.
6. Bridge Loan
Obtain financing to leverage the equity in your home. Bridge loans are a financing option for homebuyers who need the proceeds from selling their current home to purchase a new one. This type of loan allows you to access your home’s equity to use as a down payment on the new property. Once the new home is purchased and the old one is sold, the bridge loan is repaid.
BONUS Strategy: Sellers Home of Choice
This addendum makes your home sale contingent on securing your next property-via purchase, financing, or lease-by set deadlines. If unmet, either party can cancel in writing, with deposits returned per the contract.
Ready to Make Your Move?
How to Buy and Sell a Home at the Same Time
The Real Creative Group Move-Up Framework
Step 1: The Equity & Goal Assessment
We start with a comprehensive home valuation to determine your current equity. Then, we map out your buying power and review the strategies to see which fits your life best.
Step 2: The Prep & Search Phase
While our award-winning production team prepares your current home for the market, we simultaneously set up hyper-local searches to find your next dream home.
Step 3: The Synchronized Closing
This is where our expertise shines. We expertly negotiate timelines, handle contingency periods, and align closing dates to make your transition as smooth as possible.