How to Buy Your Next Home Before Selling Your Current One

By Jacqueline Smith

Jacqueline Smith is dedicated to serving the vibrant Vancouver/Portland real estate market. Since stepping into the industry in 2014, I hit the ground running selling 52 homes in my first year and now have my hand in selling over 1700 properties.

Picture this. You’ve found your dream home. You’re excited, you’re ready to move, but you still have your current home to sell. The last thing you want is to end up with two mortgages or, worse, no place to live while you figure it out.

The good news is this is a situation we help clients through all the time, and we’ve never had a client end up homeless. There are real strategies for buying before you sell, and the right one depends on your situation, your finances, and the market you’re in. Here are the five we use most often.

1. The home sale contingency. This is the lowest-risk option for you. You make an offer on the new home, but the purchase is contingent on your current home selling first. It protects you from carrying two mortgages. The trade-off is that it can be a hard sell for the other side. If you put yourself in the seller’s shoes for a minute, here’s what usually happens. If they receive multiple offers and some are not contingent on a home sale and one is, the only reason that seller would choose the contingent offer is if it’s the higher offer. So while this protects your bank account, you may end up paying more for the home you want because you’re asking the seller to take on the risk of waiting for your home to sell.

2. A bridge loan. If you want to make a stronger offer, a bridge loan is a way to financially bridge the gap between your purchase and your eventual home sale. It unlocks the equity in your current home so you can use it toward the next one. A variation on this, if you have a robust investment portfolio, is a securities-backed line of credit. This lets you borrow against your securities account without actually selling your stocks, which can be useful if you don’t want to trigger a tax event or miss out on market gains.

3. Tapping into existing wealth. If you’d rather not take on new debt, you may have options through assets you already own. A HELOC (home equity line of credit) lets you borrow against your current home and use that money for a down payment on the next one. Another option is taking a loan from your 401(k). Since you’re borrowing from yourself, the interest you pay goes back into your own account. These are good ways to access fast cash while your current home is being prepped for the market.

4. Buy-before-sell programs. There are now specialized programs from companies like Knock, Flyhomes, and HomeLight that let you make a cash-like offer on your next home and then sell your current one afterward. Essentially, the company fronts you the money to buy the next home while you manage the sale of your current residence. These programs aren’t for everyone, so you’ll want to talk to a mortgage professional to see if it makes sense for your specific situation.

5. A rent-back. With a rent-back, you put your current home on the market, sell it, but negotiate with the buyer to stay in the home for a set period of time after closing. This takes some of the rush out of the equation. The two things to keep in mind: if you don’t find the right next home in the time you’ve negotiated, you’ll want a backup plan. And not every buyer is in a position to offer you a rent-back, so this can narrow your buyer pool slightly when you’re selling.

There are a lot of options when it comes to making a big move, and it can feel overwhelming when this isn’t something you do every day. That’s exactly what we’re here for. If you’re thinking about making a move and you’re not sure how to make the transition work, we’d love to sit you down for a complimentary consultation where we’ll walk you through your options and help you figure out which one makes the most sense.

Call us at 360-800-1334, email jacqueline@evergreenrealestatepartners.com, or visit blog.evergreenrealestatepartners.com. We’re always happy to help.