| |
Strategy |
Advantages |
Disadvantages |
| 1 |
Buy a replacement home first.
|
You know where you’ll be moving
and how much you’ll be paying.
|
You don’t know how much you’ll
net from the sale of your home, or how long it’ll
take to sell. Owning two homes is a possibility. Qualifying
for a mortgage may be difficult. Requires liquid cash for
down payment.
|
| 2 |
Buy a replacement home
first with a contingency for the sale of your current home. |
Same as above, but you
minimize many of the risks. |
Many sellers won’t
accept contingent sale offers. The best homes sell without
this contingency. Poor bargaining position. |
| 3 |
Buy a replacement home
first using a swing loan (interim financing) for the down
payment. |
Same as #1. Enables you
to compete against non-contingent sale buyers because you
can buy without having your home sold. |
High financial risk, especially
if your home takes a long time to sell and/or sells low. High
carrying costs. Qualifying for financing is more difficult.
Swing loans are often due in six months. |
| 4 |
Buy a replacement home
first using a line of credit secured on your current home
for the down payment. |
Same as #1 and #3 |
Less financial risk than
#3 because credit lines usually don’t have a short due
date. High carrying costs. Some lenders don’t permit
the use of a line of credit for home purchase. |
| 5 |
Buy replacement home first
with an employee buy-out (for transferees), or a new home
where the builder will take your home in trade. |
Same as #1 |
You’ll probably have
to discount the price of your home in exchange for turning
the risks of sale over to someone else. |
| 6 |
Sell current home first. |
You know how much cash
you’ll net from the sale. Eliminates financial risk. |
You may have to go to an
interim rental if you can’t find a replacement home
to buy in time. |
| 7 |
Sell current home first
with a contingency to find a replacement home. |
Same as #6. You don’t
have to move if you don’t find a replacement home. |
Few buyers will accept
this contingency. You may have to discount your price. |
| 8 |
Sell current home first
with a long closing and/or a rent-back option. |
Same as #6. Reduced chance
of having to move to an interim rental. |
Buyers who need a quick
close and possession won’t be able to accommodate you. |
We at Valerie Fitzgerald and Associates realize that you are in the information gathering stage of your purchase and we respect your privacy. Should you have any questions, please feel free to email us at info@valeriefitzgerald.com or call us directly at 310-285-7515. If you or anyone you know is looking to buy or sell a home, please note that we can provide detailed information and access to
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