Selling a home while house hunting can be a bit of a balancing act.
It can also be a little trickier in a market like Denver, which is inching toward a buyers’ market but is still considered a sellers’ market.
Why? Well, sellers with a good choice of buyers are much less likely to accept an offer that is contingent on the sale of your home.
You can avoid a contingency clause in your offer by getting a bridge loan, which is essentially a short-term loan designed to ease the financial strain of buying a new house before you sell your old one. You pay off your mortage with a bridge loan, and when your home sells, you use the proceeds to pay off the bridge loan.
Bridge loans can be a gamble, though, as they often come with very strict terms and high interest rates. Plus, if there is a problem with either the closing of your former or new home, you are still responsible for paying back the loan within the time frame agreed upon, or finding yourself with hefty monthly interest payments until you sell your old home.
Another option, if it does not stretch you financially, is to keep two properties for a bit. This is the safest option, as you can make offers on new homes without having to worry about making contingency offers or needing a bridge loan.
If having both homes is not an option for you, your best bet in a sellers’ market would likely be to sell your home first and buy second. This means less risk, since your sale is closed and you’d know exactly how much your budget is for a new home.
However, this also means you may have to consider options if you need to move out of your home at closing, which can include renting a storage space for your furniture and staying at a hotel or AirBnB, or a month-to-month lease.
Another great option is to negotiate “renting” your home from your buyer for 30-60 days if the buyer is flexible on their date of occupation. This would buy you time to make offers on new homes that would not be contingent on selling your home. Plus, you wouldn’t have to move twice.
Still unsure what to do? Feel free to contact us! We can help you figure out which option is best for your particular financial situation.