A seller’s market guarantees you a top price for your home. This is because the high demand for housing exceeds its supply. However, this isn’t a piece of great news if you’re looking to buy another home in the same seller’s market. So, should you sell before buying or buy before selling?
Here are some viable options to consider.
- Secure Financing to Buy Before Selling
Yes, you can buy before selling by exploring some feasible real estate financing options. First, talk with your lender about qualifying for a Home Equity Line of Credit (HELOC). This type of gap financing allows you to take out a loan secured against the difference between your home’s value and your remaining mortgage debt. Another option is to get a loan against your retirement savings (401(k), IRA, or Roth IRA) if you’re old enough to withdraw the funds. If you qualify, you may use these loan options to acquire your next home before selling the existing one.
- Sell for Instant Cash
Consider selling to an iBuyer for quick cash, which you can then use to purchase your next home. However, you will need to find the right home first, and when you’re ready to contact the seller, you can then offer your current home for instant cash. This non-conventional approach will enable you to close fairly fast after you’ve accepted the buyer’s offer.
- Sell First, But Secure an Agreement with the Buyer
Use your superior bargaining power in a seller’s market to strike a favorable deal with the buyers. For a good price, many buyers will readily agree to reasonable concessions, such as allowing you more time before moving out of your current home.You could request a rent-back agreement too. This would allow you to rent the home on sale after it’s got a new owner. The temporary lease arrangement would allow you the convenience and time to find your next home.
- Make a Solid Contingent Offer
If you don’t qualify for financing but still want to buy before selling, you should consider making an attractive offer that’s more contingent on selling your existing home. For example, beat the competition with an offer above the asking price or commit to paying for repairs. Incentives like offsetting inspection and appraisal contingencies also make for an outstanding offer on a home in a seller’s market. Make sure to discuss the best options with your real estate agent or realtor.
- Rent out Your Current Home
If you can rent out your house for profit, go for it. Your monthly rental income might even exceed your mortgage loan payments each month in a seller’s market. In this scenario, your tenant could be paying your mortgage as you wait on the perfect opportunity to buy your next home. However, consult with your lender before turning your home into an investment property with a view of buying another one immediately or in the near future. If you haven’t paid off your current mortgage, then taking another loan to buy a home may complicate your finances and isn’t always a viable option. Keep in mind that you’ll be responsible for maintaining your investment property, thus adding to your regular cash outlays.
- Sell and Rent an Apartment
You don’t have to buy a new home immediately after selling the current one. You could sell and wait to purchase when market conditions have changed in buyers’ favor. Moving into a rental apartment can give you the breathing space necessary to find an ideal residence for the right price.
These are some of the ways to protect your financial interests when selling and buying a home in a seller’s market. Are you looking to buy or sell a home in the Hermosa Beach area? Contact our experts at Brighton Escrow today. We are happy to offer you a top-tier escrow service.