Are you in the challenging (yet extremely common) position of trying to buy a new home while also selling your current residence? Buying and selling a house at the same time is a position the vast majority of homeowners have been in at some point in their lives.
If you find yourself in this situation — or if you’ve already sold your house but cannot find another home you want — you have a variety of options.
1. Decide if You Want to Accept or Ask For Contingencies
Contingencies are real estate clauses that give one or both parties the ability to cancel the contract under certain circumstances. Common contingencies in Newport Beach real estate are financing contingencies (giving the buyer time to obtain a mortgage), home sale contingencies (giving the buyer a certain amount of time to sell their home in order to finance the new one), and inspection contingencies (allowing the buyer to cancel or negotiate the contract based on inspection findings.) In a buyer’s market, contingencies are common, and many sellers will consider offers with contingencies to facilitate the sale of their homes.
Before you list your home or start looking at new homes for sale in Newport Beach, consult with your real estate agent whether or not you should include contingencies in your offer or if you will accept offers with contingencies for your home, based on your situation and goals. Though you can stay flexible depending on the buying or selling situation that arises, making these decisions early helps give you a clear plan of action.
2. Look Into Your Financing Options
If both the buying and selling process go as planned, you will be able to access the equity in your current home to make a down payment on your new piece of real estate and pay for other expenses, including closing and moving costs. However, if you find a new home to purchase before you sell your current one, you’ll need to make other arrangements.
Not sure how you’ll cover these expenses if you can’t tap into your equity? Here are some options:
Sell assets.
No one really wants to sell valuable assets like stocks and bonds, precious metals, or artwork and lose out on potential appreciation. However, if you have these in your possession and don’t want to take out a new loan that will incur interest, it might be your best choice.
Refinance your current home with a cash-out option.
You can take advantage of the current low mortgage rates and refinance your current mortgage while also getting the cash you need with a cash-out refinance. This program allows you to pay off your current mortgage and take out a new one for more than what you owe on the property.
Secure a home equity line of credit.
A home equity line of credit (HELOC) is a revolving line that is secured by your primary residence. These types of loans typically have lower interest rates than other options, especially if you have a good credit score and low debt-to-income ratio. Another benefit of a HELOC is that you can choose how much money you access and, therefore, how much you will have to pay interest on.
Before you list your home or start looking at new homes for sale in Newport Beach, consult with your real estate agent whether or not you should include contingencies in your offer or if you will accept offers with contingencies for your home, based on your situation and goals. Though you can stay flexible depending on the buying or selling situation that arises, making these decisions early helps give you a clear plan of action.
3. Consider Logistics
What will you do if you sell your house and cannot find homes for sale in Newport Beach you want to buy? Or, on the flip side, what if you find yourself paying two mortgages because you’ve bought new real estate and don’t have any good offers on your house for sale? Here are some solutions to consider:
Ask for a leaseback.
A leaseback is an agreement between the buyer and seller that the seller will be able to stay in the home for a certain period of time while paying rent to the new owner. This arrangement needs to be made before the deal is done, so make sure you don’t wait until closing to broach the possibility of a leaseback arrangement.
Get a storage unit.
A storage unit is helpful in all situations when it comes to buying and selling real estate. You can store excess belongings while you sell to make your home less cluttered and attractive to buyers, and you can keep your things there if you need to live in a short-term rental, hotel, or with family.
Rent out your home.
Have you found a new home to buy but don’t want to pay two mortgages while you try to sell yours? Consider renting it out. You can do this short-term to temporarily cover the mortgage or turn it into a long-term rental for another stream of revenue.
Secure a short-term rental.
If a leaseback is not an option, consider renting another home for a few months if you’ve sold your home and haven’t yet found a new place to buy. This will take the pressure off and allow you to wait for the piece of Newport Beach real estate that is perfect for your family.
The best piece of advice for those who are trying to simultaneously buy and sell Newport Beach real estate? Work with a knowledgeable local real estate agent like Jasmine Wilson who can be by your side during the entire process and handle all the details so you can focus on the bigger picture.