Often buyers need to sell their current home in order to buy the next one. This creates a complicated juggling act in which the buyer is left trying to find a way to close on the new home after the current home without becoming homeless.
Kristin Dockery with Sher-Den Realty said the most important step to this process is to make sure to get prequalified.
“Make sure that’s set up because that can take up to 30 days if there’s a problem you need to fix,” Dockery. “If you find a home that you want to buy you can ask for a contingency for your house to sell. If your house is in a prime location and they have received a few offers the seller may take the contingency. As long as you have your funding set up the process can be smooth.”
Debbie Hudnall with Virginia Cook Realtors agreed, saying most sellers won’t accept a contingent offer unless the buyer’s home is already under contract.
“Then at that point, the buyer’s house has to close in order for the other contract to go through, so it’s kind of like a domino effect. Unfortunately, sometimes it doesn’t happen like it should. If the buyer’s don’t end up closing on their house then the sellers have to put their home back on the market. Then it looks like it was on the market for a long time.”
Hudnall explained when a home appears to have been on the market for a long time buyers may think they can get a better deal on it and will offer less.
There are options for those that don’t wish to go the contingency route. Dockery said closing dates are negotiable.
“You can always negotiate the closing date to push it back and give the buyers more time to sell their home,” Dockery said. “You can also try to negotiate a lease-back if the buyers have sold their home but haven’t closed on their new one yet.”
A lease-back allows sellers to remain in the home past their closing date by paying a rental fee to the new owners of the home. This can be useful for those that wait to find a new home until their house has come under contract.
Hudnall said bridge loans can also assist in the transition process. Bridge loans are designed to use the equity in a current home to help bridge the gap between two mortgages until the original home can be sold and the mortgage paid off.
“They can go and get a bridge loan and pay it off as soon as your home has sold,” Hudnall said. “You can get a bridge loan if you have good credit and a high enough salary. It uses the equity in your house temporarily until it’s sold.”