We are tossing around the idea of moving about 40 minutes away to be closer to jobs and more school options for our 3 kids. The real estate market where we are is fairly hot, although it's a bit hotter where we want to move to. We'd have to sell our current house first in order to have enough money for a down payment. Have you done this, and how did you do it? Did you have a contingency (which I know isn't looked upon favorably in a hot market), did you move into some sort of temp housing in between? How did the timing work? Of course we will talk to a realtor, but we are doing preliminary research before we even head down that path and I'd love to hear some other experiences. This process seems very intimidating to me.
I’ve only ever bought houses with the contingency of selling my current home, and it’s never been an issue before. I’m not sure how much of an issue it would be in the current market. It might mean having to put together a more attractive offer, or waiting until you’re under contract on your current home before putting in an offer.
We’re about 8 months out from this exact situation, so I’m interested to see some of the other responses here.
We sold and bought in a hot market. We are going to close on both homes this week. We did not have our current house on the market, but a realtor in our neighborhood had buyers and things were slowing slightly in our desired neighborhood. The people who came and saw our place decided to buy it. The following weekend we went out looking at homes and put in a full price offer contingent on the sale of our house. They accepted immediately despite having another offer (they did not like the first offer). We think it’s possible because we are a young family and they seemed very enthusiastic about us having young kids. We feel very fortunate. We did work in on the sale contract that we would have 3 months post closing to move out so we could put in a non contingent offer on a new place if needed. This worked out because even though we plan to close on both the same day, we need to do some work on the first house prior to moving in.
We sold our house and then set out to buy a new one once we accepted an offer. However, we were willing to rent for a year if we didn’t find a place fast enough. We did though. We closed as sellers 3 days before we closed as buyers.
Post by formerlyak on Oct 17, 2021 12:49:40 GMT -5
We bought a home where the sellers needed to sell in order to buy. As per of the sale, we agreed to let them rent the house back from us for up to 60 days while they put in and offer and closed on their new house. This allowed them to know what they had cash on hand for a downpayment, and the bank accepted our offer as proof of funds for their new purchase.
We moved into a duplex rental, sold our TH and then bought our SFH. Moved into the rental end of June 2020, sold TH middle of August 2020 and bought SFH in early September (closed on Nov 30th). We spent 5 months in our rental. We moved 2.5 hours away from our TH and it was a really hot market.
Post by plutosmoon on Oct 17, 2021 14:20:53 GMT -5
My last house, I sold first and then couldn't find a new place to buy, so I am renting for a year. Unfortunately, I was selling due to divorce so my timeline wasn't flexible, my ex and his lawyer were breathing down my neck to find a new place so the old house could close, so I grabbed what I could find. I think 2 houses came on the market for sale during that time. I'm still not having much luck, so I may end up in this rental another year.
My first house we had a short timeframe for moving as well, so we moved and rented, put the house up after we moved and closed the sale about 4 months after we moved. That was a slower market and we had 2 or 3 sales fall through.
We wanted to do this recently and couldn’t find a way. There was a house that we definitely couldn’t have made a contingent offer on, and after talking to lenders the best we could do was to structure the loan as an investment property and come to the table with 500k, and then sell our house and pay off the second mortgage with the proceeds. Depending on the size of your loan it can be really hard to buy without selling first.
We were able to get a bridge loan the last time we bought a house. The one we were buying was a foreclosure, so a contingency offer was not an option. We were able to put some money down on it and then took out a bridge loan for the remainder of our downpayment, I think. It’s been awhile, so I don’t remember the specifics, but it’s worth googling to see if it might be an option for you.
Post by purplepenguin7 on Oct 18, 2021 8:59:25 GMT -5
i'm doing this right now and it's very very tough. We had to lower our price range to get a pre-approval to carry two mortgages on paper (even though we are definitely selling our old house). I fought very very hard with our former agent, who we fired for several reasons but was also super unhappy that we weren't selling first.
We looked for a new house for 8 months and when we finally found one we were lucky enough to find a seller who wanted to a long close. After our offer got accepted we listed our old house (showings start tonight). In a perfect world, we will find an opposite buyer who wants a fast close in a effort to close on our old place first, get the cash profit to turn around for the remainder of our downpayment. This won't be unheard of since we are selling a "starter' condo. If the timing doesn't work out, will likely have to borrow from our 401ks to cover the remaining 10% of the downpayment, or re-configure the loan to be 10% down instead of 20% if that will work. Our lender did not do bridge loans.
It's chaotic, there are a ton of moving parts. Everything is uncertain and my life is a ball of stress. But, we found an awesome new house that will work perfectly for our family so I know it will all be worth it in the end.
We just moved locally this year. The market was very hot at both our purchase and sale price points. Since finding a house (and getting an offer accepted) was taking everyone much longer than selling, our REA advised that we not list until we found a place to buy. This is how it all went:
January 2021 - made the decision to do it. Engaged a realtor to help us house hunt, got pre-approved for mortgage. Lender wanted to know whether we would be making a contingent offer or not -- this affected how much we could be preapproved for. Obviously higher amount if we made a contingent offer. On our realtor's advice we opted to have the letter written for no contingent offer, because every house we would be remotely interested in, was going to multiple offer situations, and a contingent offer would never win. If we wanted later, the bank would write the letter differently without redoing everything.
Jan, Feb, Mar: Went to showings, poured over the MLS, and prepped our house for sale. Finished all those annoying projects that I'd gotten used to seeing unfinished. Rented a storage unit and started decluttering and moving stuff out. The goal was to be listing-ready so we could list fast when it was time. We could carry two houses for a little while, but really didn't want to do it for long.
3/23 - Our new house was listed on MLS on a Tues 3/26 - We got in for a showing on Fri in advance of their Sun open house. 3/27 - Offered asking + about 5%. They responded that they were not going to accept an offer until they had their open house. 3/28 - Open house. It poured. Total shit day to go see houses. Silently cheered. Got a call shortly after the open house that they were accepting our offer. Woot! Let the sellers pick the closing date; they chose 5/26. 3/29 - Didn't like where rates had risen to with our preapproval lender. Started the process with another lender, and got a commitment right away for 2.875% with possible float down, vs. 3.25% with our original lender.
Went into high gear finalizing plans and prep for sale of our house.
Got through inspection and appraisal on our purchase.
Found out our next door neighbors were listing their house on 4/9. Pushed ours back a week so we wouldn't have buyers walking back & forth between the two. They went into contract within 1-2 days.
4/16 - Listed our house on MLS on Fri AM, with showings to start Sat. 4/17 - H, kids, and dog decamped to ILs. I went to my office. Back to back showings all day. Got a couple offers, all above asking. 4/18 - Ditto. Had really nice feedback and 5 above-asking offers by the end of the weekend. Realtor communicated to everyone that best & final were due Monday at 12pm. 4/19 - Chose from among the final offers. Signed contract for 7-8% above asking. Buyers turned out to be total PIAs, and wanted to amend the contract during attorney review to change the price from what they offered to appraisal plus maybe $1k-2k. Since we had so many above-asking offers, we told them no, withdraw that clause or we're cancelling the contract. 4/26 - Cancelled the contract. REA reached out to the other buyers. Several were still interested. 4/29 - Long story short, accepted an offer for the same amount from another buyer. Closing scheduled for 6/25.
Insert lots of stress around their financing, inspection issues, appraisal, etc., but no dealbreakers.
5/26 - Closed on our new house on time. Floated rate down to 2.75%. Put 5% down, with the plan to put the other 15% down, drop PMI, and recast the loan after we sold our old house.
Immediately started work on floors, painting, etc. at the new house. Frantic rush to get as much done as we could.
Since our buyers communicated flexibility around dates, we asked our buyers for a couple more days, to meet our floor finisher and movers' schedules. They agreed. Set closing on our sale for 6/30.
6/28 - Moved
6/30 - Closed on our sale, with a $3700 credit for an inspection issue, but otherwise full price.
We thought we'd use the proceeds to pay down the mortgage right away, but I haven't actually done it yet. Instead I used a little to pay off a loan from buying a share of my law firm that was at 5%, used a little more to make some immediate improvements, and the rest is still in hand. We have enough cash in hand to recast/drop PMI any time, but I just want to make sure it's the best decision. 2.75% is such a low rate!
The whole thing was wildly stressful. Add to that, I am self employed (as a law firm partner) and had a big Q1 estimated tax bill due in April, a big surprise tax payment due in May because of our CPA's error in forecasting estimates, and a big Q2 estimated tax bill due in June, all right in the stretch when cash was tight due to owning two homes, and redoing floors in the new one. Our e-fund was the lowest it's been in like 10 years, and I was stresssssssed. But it all worked out in the end as planned, and the numbers worked. Thank God. I think long run it will be worth it, but it tremendously stressful and anxiety provoking to live through. We also needed to plan for the possibility of needing cash to pay for repair of any inspection items on our sale, which ALSO would have come up in that tight month of owning 2 homes. I was super glad the buyers wanted a credit instead, and that their (VA funding) lender ok'ed that.
Selling first, interim housing, and then buying would've been more logistics (which are stressful in their own way) but less financial anxiety and risk. I guess you need to decide what you can tolerate better. I am not well suited to the financial stress and anxiety, but I also didn't want to move twice with a WFH spouse, or be in a small space with unvaxx'ed little kids, who have had to quarantine a few times, during a pandemic.
I posted a lot during the process on H&G. That board doesn't move crazy fast, so if you're interested those posts should be easy to find.