How To Sell Your House & Buy A New House At The Same Time [8 Strategies]
So in the beginning of 2021, we have extremely low income inventory in the housing market here in South Florida. And a lot of the reasons for that is that sellers don't wanna put their home on the market 'cause they don't know how they're gonna be able to get their next house. Well, in this video, I'm gonna go over my top eight tips on how to sell your home and buy a new one at the same time.
We get so many calls, texts and emails every single day from people who are moving to South Florida, and we absolutely love it. So if you're thinking about making a move here, we'd love to be your realtor of choice. Give us a call, shoot us a text, send us an email, we'd love to help you out.
So let's go over our top eight tips.
Number one seems obvious, but a lot of people don't know that you can do that, and that's making a contingent offer. So this means you write an offer on your new house contingent on your old one selling. The problem in this real estate market that we're in right now in 2021 is that that offer is not super compelling because most homes are getting two, three, four, sometimes way more offers. So a contingent offer is one of the less desirable offers. If you're gonna do a contingent offer, I suggest, and what most sellers are gonna be looking for is to see that your home is already on the market, and at the very least under contract. Ideally, we'd like to see that not only is it under contract, but you're through inspections and you're through appraisals and it's a solid deal. This is the least attractive way to a new property to get your offer accepted. It's going to be not a great offer, but it is doable, and you might find a seller who's willing to do it because they have a lot of time, maybe they're in the same situation as you are. So you can make an offer contingent on your home selling.
Option number two, buy a new construction house. There's a lot of areas where they're building new construction homes here in South Florida. And the typical build time for a new construction house is somewhere between six months to 18 months, depending on the size of the house, who the builder is, and how custom the design work is. So that might give you enough time to find the right house, buy it, have them build, and give you plenty of time to get your home ready for sale so you don't feel rushed. So buying new construction might be a great option for you.
Option number three, buy land and build your next house. There's not a ton of land left here in South Florida, so this might not be the best option for everyone depending on where you're gonna live. But there are some lots available in cities like Parkland and Davie and Southwest Ranches. If you have it in you and you have the desire to build your own next house completely customized to you, buying a plot of land and building a house on top of it is definitely an option.
Option number four is getting some sort of bridge loan that allows you to still own your current house, but buy the next one without selling that. There aren't too many companies out there that do bridge loans, but a really good option is to take out a home equity line of credit. Now, this assumes that you obviously have enough equity in the house to borrow against, but you can go into your bank or to your credit union and say, I'd like to take out a home equity line, and they will lend you most of the time up to between 70% and 80% of your home's value. So you can borrow money against your current home, use that as the down payment for your next home, and then put your home on the market. And when you sell that, it's like paying off a second mortgage. So you pay off your first mortgage if you have one, and the home equity line of credit, so it gets canceled out and you're only making payments for as long as you have that line of credit open.
Now, here's the great thing about home equity lines of credit - You don't start paying interest on them until you draw from them! So you can have them ready to go and available at any time, but you wouldn't start making payments on them until you close on the next house. So let's say you close on your house in March and you don't close on your old house until May. You're only making three months of payments on only the money that you borrowed. So it's a relatively small amount of interest that you'd be paying, but it does give you the flexibility to buy your next house and not make a contingent offer.
Here's a tip - This is something that you have to do before you put your home on the market. Taking out a home equity line is like getting a mortgage. You're gonna need to do an appraisal, and there's some things that you need to do, so it doesn't happen instantly. If that's a route that you wanna explore, make sure that you are doing that in advance. Another tip, a lot of lenders don't want to see that your home was on the market in the last six months, or they won't give you that home equity line. So make sure you're doing this before for your home officially hits the market. If you need a recommendation of some lenders here in the area that do home equity lines, feel free to give me a call.
Option number five is to rent for a little bit. A lot of people think it's gonna be a little easier. You put your home on the market, you sell it. Maybe you rent an Airbnb for three or four months or you rent for a year, and that gives you the ability to look for your next house. You're not rushing to making a quick decision on a house that maybe you don't absolutely love, or it's not completely perfect for you because you're in a short timeframe. So this gives you the ability to sell your house. You have all of the money, you can then make a non-contingent offer, and you're not rushed to find the next property. So you can look at AirBnBs, other short-term rentals, or even sign a one-year lease. Most of the leases in Florida, depending on how they're written, if you're gonna break them, only costs you two months rent. So maybe you sign a lease for a year, you find the perfect home. You're able to make a non-contingent offer, and you just factor into the cost of that house that you're gonna have to break your lease and it's gonna cost you two months of rent, but that's another option to provide you with a little bit of time between when you sell your house and when you buy the next one.
Option number six, compare different areas and price ranges. Depending on where you wanna live, the market might not be as competitive as it is for your current house. So it might be advisable to look in different areas of the state, different areas around town and find neighborhoods or areas that aren't as competitive, maybe they're up and coming and people haven't found out about it yet, or maybe you wanna live somewhere rural, away from everyone. Maybe the market isn't as hot there as it is for your house. So look at other options and where you might wanna live. See if you can find something where homes don't sell as quickly, that might buy you a little bit of time.
Option number seven is to get a long closing. In this super, super competitive market, buyers are willing to do just about anything to get into homes. So it's a very good possibility that you can find a buyer who says, okay, I wanna buy your house. I'll do all my inspections, my appraisal, I'll do everything upfront and I will give you 90 days, 120 days to stay living in the house so don't close for three or four months to give you as the seller enough time to find your next property. If the market's super strong and very competitive for your house, you might even be able to write into your contract that your contract is cancelable within a certain number of days, 30 days, 60 days if you, as the seller, can't find your next house. So it can give you the option as the seller to cancel the sale if you can't find what you're looking for. So these are all things that you can do with a longer closing.
And finally, option number eight is a sale lease-back. What this allows you to do is have a quick closing on your property. So maybe you close in 30 days, but you are leasing the property back from the next buyer for a predetermined period of time with a predetermined amount of rent. So typically what this means is you're gonna have to cover all the buyer's costs for their mortgage on the property. So let's say, for example, your payment is only $2,000 a month. If the next buyer's payment is $3,000 a month for your house, you're gonna have to pay that amount of rent, most likely, it is a negotiation, but you're gonna wanna find a buyer who would be okay with that, flexible with timing and most buyers these days, if they don't have another house to sell, as long as they're not losing money on the deal, you're covering all of their costs. They might be open to it because this market is crazy and people are doing whatever they can to make their offer appear better to sellers, to get their offers accepted. So a sale leaseback is definitely something that you can consider that will also buy you time, 30, 60, 90, 120 days of living in your current house and being able to search for your next one.
The other benefit of a sale leaseback is that you don't have to move twice. You stay in your house, you're continuing to rent it from the next owner, but you don't have to pay two moving costs. So that's a great benefit for a sale lease-back.
So I hope this answers some of your questions on how to navigate this tricky real estate market when homes are selling very, very quickly. I know it's causing a lot of stress for a lot of sellers who would like to move, but just don't know where they wanna go. Do you have any questions on any of these options that are out there? Feel free to give us a call, shoot us a text, or send us an email. We would love to be your realtor of choice in South Florida.