You CAN Move Now; It's Not Complicated

Cash constraints, the mortgage interest rate, and needing to buy and sell simultaneously are not actual obstructions. Each of these concerns can be overcome and I will help you develop and execute a seamless plan to make your move entirely doable, both logistically and financially. Home sale and home purchase contingencies are, for the most part, not a conversation-starter. Both create too much uncertainty for the opposing party. We will explore alternatives to make your move achievable, logistically and financially. In this article I will provide some options for when you Sell First, Then Buy and also for when you Buy First, Then Sell. There are a lot of ways to accomplish your goal, these are just a few!

photo credit : Ivanko80

I’ve been in the real estate industry in Central Maryland since 2008. I pride myself on getting you every last dollar when you sell your home and recognize every smooth sale starts with a rock-solid plan which includes identifying and moving you into your next home. I will treat your purchase and sale as if it were my own and develop a plan that will give you peace of mind and control throughout the process.

Option #1 : Sell First, Then Buy

Pro : You know exactly what the house will sell for and how much you will walk away with/be able to put towards your new home. You will have funds committed for the sale of your home, before you move forward with a purchase of a new home. Objection : What if I have not found my dream home by the time I agree to an offer on my current home?   Solutions : Up to 60 Days :

Negotiate A Longer Timeframe to Close : Before we accept an offer on your home, we can negotiate a longer timeframe to close on the sale of your home, usually up to 60 days. If that feels like a time crunch, we can also negotiate a ‘rent back’ with your sale.

Up to 120 Days :

‘Rent Back’ : A ‘rent back’ is a term whereby you, as the seller, are granted approval, by the buyer, to stay in your home for up to 60 days after closing on the sale of your home. Yes, that’s right - the buyer will sign the paperwork legally transferring ownership to them, you will receive funds from the sale of your home, and you will continue to stay in your home for up to 60 days after the sale of your home. In this scenario, the buyer will not take possession of your home until after the 60 days has lapsed. Combined, a 60 day closing time frame and a 60 day ‘rent back’ period, provides you with a total of 120 days (four months!) from the day you accept an offer on your home, to purchase a new home.

Four to Six Months  :

Consider an Air BnB : If at the end of the 120 days, you have not found your new home, we will discuss how much more time you think you need. If you think you need another two months or less, you may want to consider temporarily relocating to an Air BnB that’s fully furnished, until we secure your dream home.

6 Months to a Year :

Consider Short-Term Renting : While you may initially be turned off by this idea, you want your new home purchase to feel right, not rushed. A short-term rental can alleviate the pressure of just picking something. You’d be surprised at the beautiful homes that are being rented currently – this year alone, my brokerage Cummings & Co Realtors, listed rentals with the following profiles, just to name a few : a 3 bedroom, 2 full bathroom, renovated farmhouse on 80 acres; a 3 bedroom, 2.5 bathroom, renovated condo in a building built in 2021; a 4 bedroom, 2.5 bathroom, detached single family home with a private pool – all rentals! You can use this time to try something different and fun while you steadily look for your permanent home.

Option #2 : Buy First, Then Sell

Pro : You can take your time looking for your new home.

Objection : How can I make it work financially?

I will further break this down into :

- If you have the cash for a downpayment and closing costs now and can afford to carry two mortgages, temporarily

- If you have the cash, but cannot afford to carry two mortgages temporarily

- If you don’t have the cash, but can afford to carry two mortgages temporarily

- If you don’t have the cash, and cannot afford to carry two mortgages temporarily

- If the current mortgage interest rate is causing you pause

If you have the cash for a downpayment and closing costs now and can afford to carry two mortgages, temporarily  If you have enough cash available for the downpayment and closing costs on your new home, without selling your current home, the easiest and least expensive path forward would be to purchase your new home and then prepare your home to sell as quickly as possible. I would do a lot of the heavy lifting here to help you tie up any undone projects, get your home cleaned and staged (if necessary), get professional photos, etc so that we can get your home listed promptly and limit the length of time you are paying two mortgages.

If you have the cash, but cannot afford to carry two mortgages temporarily

Consider renting your current home :

Consider renting out your current home for just one year. While you may initially be turned off by this idea, renting your home for a year is an option that can alleviate some pressure. Typically, the lender for your new home will need documentation that the tenants are not related to you and have signed a lease for at least one year. I can help you properly qualify your prospective tenants to be sure they have solid credit, a history of paying timely, a positive review from their prior landlord, and will take care of your home. This temporary solution can ensure that your mortgage is paid (and then some) for the upcoming year while you pocket some money towards getting the house ready to sell upon lease expiration. If you don’t have the cash, but can afford to carry two mortgages temporarily Gift funds : A friend or family member can gift you funds toward your purchase. This will have to be disclosed to your lender, who will need documentation that the money is truly a gift, not a loan. Additionally, the lender will need documentation that the funds exist. Borrow from your 401(K) : 

If you have funds in your 401(K), you can tap them for your downpayment and closing costs on a new purchase. You would likely want to borrow from your 401(K) which would be considered a loan (and may cost you interest on that loan), vs withdrawn from your 401(K) which could have penalties. Bridge loan :

If you have equity in your current home, but do not have enough cash available for the downpayment and closing costs on your new home, you can pursue a bridge loan. A bridge loan allows you to tap the equity in your current home to obtain funds for the downpayment and closing costs on your new home. A bridge loan acts as a second loan on your current home and will need to be paid off when your home sells. If you don’t have the cash, and cannot afford to carry two mortgages temporarily In this scenario, my recommendation would be to prepare to rent your current home temporarily, for one year (see the reasons detailed in the section above) as having a one year lease in place will grant you mobility to pursue a new home. As far as obtaining cash for the downpayment and closing costs on your new home, we can explore gift funds, borrowing from your 401(K) (both explained above), grant programs, and requesting seller concessions toward the funds you’ll need for closing. If the mortgage interest rate is causing you pause Regardless of whether or not you have the cash to proceed with a purchase or the ability to temporarily carry two mortgages at once, you may just be sitting on the sidelines hoping the mortgage interest rate will drop. Did you know that you can buy down your mortgage interest rate or request funds from the seller so you can buy down your mortgage interest rate? This is called a buy-down. Let’s consider the loan on the home that you would like to purchase is $600,000. For 1% of that loan ($6,000) you can generally buy down the mortgage interest rate by .25%. So in this scenario, if today’s mortgage interest rate is 6.75%, for $6,000, you can have the mortgage interest rate reduced to 6.5%. You can tap additional funds or ask the seller for additional funds to buy the interest rate down further. We will discuss this with the lender and the seller. And, if and when the mortgage rate does come down in the future, you can refinance your home to a new lower interest rate at that time.

Where There's A Will, There's A Way

If you can qualify for a home loan, there are truly no obstructions to being able to move in this current market. You just need a detailed plan of action and that’s what I’m here for! I will take the lead on your purchase and sale or short term rental.