Buying a home while selling your own? It’s easier than you think
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If you’ve looked at property prices recently, it’s hard to miss the fact that tight inventory and bidding wars are causing homes to sell at all-time highs. For many regions, it doesn’t appear home prices will level out soon. As HomeLight reports in their Top Agents Insights Spring 2021 Report, 97% of real estate agents said their region is a seller’s market higher than Q3 and Q4 figures when 92% shared the same sentiment.
Buying a home while selling your own? It’s easier than you think
Much of this demand is due to historically low mortgage rates and an inventory shortage that has only worsened. HomeLight reports that 91% of agents currently feel that inventory is lower than they expected, a significant jump from the 73% the year prior.
While these figures can be discouraging for any homebuyer, existing homeowners have to worry about aligning their home sale with purchasing a new space. Fortunately, if you’re looking to buy and sell a home at the same time, you have a few sensible home-buying options to choose from, such as buying:
- With a sales contingency: This is where you make an offer on a home on the condition that your home sells by a specific date. This approach is best suited for sellers in attractive housing markets where their home is likely to sell quickly.
- With a bridge loan: Bridge loans are relatively high-interest loans that you can use to fund the purchase of a new home. When your home sells, you can use the proceeds to pay off the loan. To minimize loan interest, homeowners frequently take out a bridge loan as soon as they put their home on the market.
- Using a home equity loan: If you have a lot of equity in your current home, a home equity loan can serve the same purpose as a bridge loan, but at a potentially lower cost.
In addition to the above buying options, you could also rent your home as a vacation or traditional property, or enter a rent-to-own scenario. The latter is when you rent a property for a specific period of time and later outright purchase the property.
The importance of expert advice
Given the complexity of real estate transactions, it’s essential to work with a realtor to sell your property, and even evaluate your next home. Since real estate agents don’t get paid until you sell your home, there’s no cost to have a consultation. In many cases, they’ll even walk through your property and provide their recommended selling price.
The best time to contact a realtor to assist with selling your home is around three months before selling, but no sooner than six months before listing your space. By reaching out to a realtor during this window, you’ll have time to get professional input on recommended upgrades and improvements to improve your home’s curb appeal.
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In addition to helping with home sales, realtors can also help you purchase a home by providing you with insights into neighborhood details, fair market property values, and more. Since buyer’s agents (as they’re called) are paid a commission based on the purchased home’s value, you don’t need to worry about the cost.