Have you outgrown your current home and are looking to upsize? However you are not quite sure how to buy when you also need to sell? Today I am going to share with you 5 strategies on how to buy when you need to sell.
The first and easiest scenario is to purchase your new home before selling your current home. This allows you to avoid a double move and the headache of finding temporary housing. However this step is only do-able if you can qualify to own both homes at the same time. In order to determine if this strategy will work for you, you will need to talk to a mortgage lender. A lender will be able to analyze, review and discuss your financial situation with you to decide if buying before selling is an option you can take advantage of.
Buy with a sales contingency. What is a sales contingency? A sales contingency is when you put a stipulation in your offer that states if your current home does not sell by a certain date, you can back out of the purchase contract with no penalties. In a balanced market or buyers market this strategy is used frequently. Unfortunately in a sellers market this option is not very feasible, unless your home is already under contract and you are through critical steps such as the inspection and appraisal.
Borrow from your investment funds. You can use your 401k or other retirement funds to fund your purchase either through a 401k loan or a withdrawal. In order to proceed forward with this option you definitely want to strategize with a mortgage lender and your CPA or accountant to see if this is a good strategy.
Sell your home before you buy and ask for an extended closing period. What does this mean? This means that you are going to ask for the close of escrow day (the day you need to be fully moved out of your home) to be longer than the typical 30 days it takes to close escrow on a home in Phoenix. Asking for an extended closing period gives you more time to find a new place to live and can help you avoid a double move. This is negotiable and definitely worth trying to ask for.
Ask for a leaseback clause. If you sell your home and can’t find a new one to buy right away, consider asking for a leaseback clause in the sales contract. What does this mean? This means that you are asking to stay in the home you are selling after the buyer closes escrow. You just need to make sure you are not going against any financing guidelines if you choose to go this route.
Now that you know 5 strategies on how to buy when you need to sell, you may also be interested in learning about 5 tips to get your offer accepted in a sellers market. In my next blog you will learn the top 5 tips to make a competitive offer in a sellers market so you have a chance of securing a property