Mastering the Move: Buy Your Next Home Before Selling the Old One

By Michelle Bailey

Michelle Bailey is the managing partner of the Ben Kinney Team at Keller Williams Realty Boise. She is responsible for hiring, mentoring and coaching Realtors®. They deliver the dream of homeownership and help buyers and sellers build wealth through real estate.

If your clients are considering moving to a new home before selling their current one, navigating this transition smoothly requires strategic planning and a good understanding of the options available to leverage their home equity. Here’s a straightforward guide on how your clients can make their move without the immediate sale of their existing home.

1. Use a HELOC. A HELOC serves as a second mortgage that allows homeowners to access their equity without selling their property. Typically, lenders may allow borrowers to access up to 85% of their home equity. It’s crucial to secure this line of credit early in the process, as approval might take longer than a traditional mortgage. Once your clients move, they can sell their old home at their convenience and use the profits to repay the HELOC.

“Each option offers different benefits and considerations.”

2. Use a Bridge Loan. Bridge loans are short-term financing options that use your client’s current home equity as collateral. These loans can cover up to 80% of the combined value of both properties, providing a quick influx of cash to facilitate the purchase of a new home before selling the old one. However, bridge loans generally come with higher interest rates and are best suited for those with excellent credit and substantial equity. A quick sale of the old property is advisable to avoid prolonged high interest payments.

3. Negotiate sale contingencies. Despite being less common in competitive markets, sale contingencies can still be a viable option. These terms allow sellers to proceed with buying a new property contingent upon the sale of their current home. Encourage your clients to have their home market-ready to expedite the process once they find their new home.

Each option offers different benefits and considerations, and the right choice depends on your client’s specific financial situation and the housing market dynamics. For personalized advice and further assistance in navigating these options, feel free to reach out for a detailed discussion tailored to your client’s needs.