My wife and I are planning to sell our condo this year. When we bought it nine years ago, we were first-time buyers. Now we will be first-time sellers.
I came across this idea of “buy before you sell,” and looked into it a bit:
It sounds great, on paper. I would gladly spend a few extra thousand dollars to only have to move once, not deal with a contingency, and avoid having a stress-induced heart attack from said contingency. And lots of other little things that would make the whole buying/selling/moving process much smoother.
But, ya know, if it sounds to good to be true…
I’m wondering if anyone here has any experience with buying and/or selling this way?
I’m thinking of doing the same myself. One consideration (for old people in California) is that I can transfer my original home’s tax base (or partial tax base) to my new home, and to do that you have to sell your old home within a certain time frame or you lose.
I have paid off my currrent home, so I won’t be in the position of paying two mortgages, but taxes, electricity, HOA, etc.
It does, if you can afford it, and that’s what gets most people. If your current home/condo/whatever isn’t paid off, you might not be able to afford both mortgages along with the other expenses of having two properties.
You need to be prepared to handle things financially if something happens and your current property doesn’t sell quickly after you move into the new property. As long as you can handle that, then go for it. It will make things a lot easier.
I personally don’t have experience with it, but a friend of mine carried two mortgages for a while and they were able to handle it financially. It worked out well for them.
I bought before I sold and it worked out well. The place we bought had a tenant and so I collected rent for 8 months. The money I borrowed to that was from my son. When I came to sell, I had 7 offers the day it hit the market and we accepted one that night. Not the highest, but the one with no inspection.
I always looked for a new house before selling my existing one, but I didn’t make an offer on it until I had an offer on my house that I had accepted. I’ve done this a number of times, and I never had a problem with the timing. I would take possession of my new house a day or two before moving out of my old one. I don’t see any reason to do it differently.
I’d be very suspicious about any ‘program’ that promises to ‘help’ with this. They are probably after your money, providing a ‘service’ that you can probably arrange much more cheaply for yourself with a little work.
I believe the OP is talking about companies that advertise that they will buy your house immediately for cash, then let you live in it for a period while you find a new house.
Large corporations like Generous Electric used to do this for corporate relocations - I used that service once back in 1990. In that case GE was contracting with a company called Home Equity, which AFAIK made their money on a fixed fee that GE paid. Purchase price was based on multiple appraisals.
Airwaves are inundated with companies offering similar services to the general public (72 Sold comes to mind as it has a particularly smarmy spokesman, but there are 3-4 others who advertise here in Phoenix regularly).
IMHO these ads fall into the “If it’s too good to be true then it’s a scam” category. I would love to be proven wrong. The only market I see for this is someone who has to dump their property fast due to financial distress or someone selling a property as part of an estate settlement who doesn’t want to deal with the hassle of regular home selling.
Other way around. They give you a short term bridge loan based on your home equity. Once that’s approved, you can buy the new house without waiting for the old one to sell. They presumably put a lien on the old house , just like any other mortgage. You move into the new house and when the old one sells, you pay off the loan. They will buy the old house below market value if it doesn’t sell within a set time frame.
People do this so that they don’t end up selling the old house and needing to be out by March 1 without a new house to move into . Because they need the money from selling the old house to put a down payment on a new house , so they can’t just buy the new one before selling the old one without using a bridge loan, a home equity loan on the old house or one of these programs,
For example, I have a home equity line of credit. If I decide to downsize and find a condo next week, I can just write a check for the down payment. I can probably pay the full price in cash. The bank will get monthly payments until my house sells and then the proceeds will pay off the line of credit. If I didn’t have the HELOC, I could take out a short-term bridge loan or I could make an offer on the condo contingent on my house being sold.
From what I’ve seen, the normal way is to make an offer on the new house contingent on the sale of the old house and then try to arrange things so that the new house is available to you before you must be out of the old house.Or take out a bridge loan if you can afford to possibly pay two mortgages, homeowner’s insurance etc while you wait for the old house to sell.
“Buy now ,sell later” eliminates a lot of logistics - you won’t miss out on the new place because the old one is taking too long to sell , you won’t have to worry about the sale of the old house closing before you find a new one (you can delay listing the old one until you’re in the process of buying the new one) - but it’s probably going to be more expensive than doing much the same thing with a bridge loan or HELOC. And if the old house doesn’t sell by the deadline, you’ve often made a deal to sell below market to the “buy now” company.
That’s not how they advertise around here. From doughopkins.com:
If you’re looking for an effortless process to sell my house fast, I’m here to help. I provide a cash offer on your home within 24 hours, no matter its condition; small, large, or in need of repairs. Not only that, there are no fees or commissions, and no banks or repairs required.
That’s a completely different business , This is what it says in the article listed in the OP
Each buy-before-you-sell program operates a little differently. Generally, they involve using a short-term bridge loan to tap into your current home’s equity so you can make a cash offer on a new house. Here’s the basic process:
Determine if you’re eligible. The amount of cash you qualify for typically depends on the equity you have in your existing home. So, if you’ve only owned your current home for a short time, you may not qualify.
Make an offer. Once your loan is approved, you can use it to make cash offers on a new home.
List your old home for sale. Any fees will be deducted at closing, and your bridge loan will be refinanced into your mortgage.
“Buy before you sell” programs aren’t for people who want to sell fast, they’re for people who want to buy fast, before they sell the current house.
We took out an equity line of credit on our condo before we started the whole process, about a year before. Then, when we found the place we eventually bought, we took out the HELOC for our down payment, and that left us with an interest only payment for that while we put our condo on the market.
We were able to sell our condo in about 3 months, meaning we had 2 or 3 interest payments on the HELOC before using the proceeds of the sale to pay off the HELOC principle and take a bit of profit.
It would have been a bit uncomfortable paying the HELOC interest if our condo didn’t sell for a long time, but we are fortunate enough to have the cash flow to cover it. As it was, the overlap allowed us to do work on our current home before we moved in, and our move in process was pretty simple.
My wife and I where still working when we bought the place. New place is 110 miles away from our jobs. But I could work from anywhere. So we sort of tag teamed the move in 2 SUV’s About 20 trips. It was a trick because my wife was still living at our old home, I was in the new one. So we both needed ‘stuff’.
We donated a bunch of stuff. You accumulate a lot when you live in a house for 33 years.
It took me three trips just for my tools.
We did get movers for the big stuff. Worked out well in the end. Things are finding a home in the new house.
Bigger house because of retirement. Four berooms instead of two. We spend a great deal of time together, but we also want our own time.