Exploring Options for Homeowners
Admit it: you’re online browsing Zillow or Redfin because “it’s fun to look at houses”, then suddenly, “the one” pops up and your mind starts racing. You SEE YOURSELF living in that home and you must have it, but you look around your house and it’s nowhere near ready for the market and you have to sell your house to get the equity out in order to get that dream home you just saw online before someone else does. Sound about right?
For many homeowners, buying a new primary residence while selling their current home can feel like a daunting balancing act. With the equity from your current home often needed to purchase your next one, the process requires strategic planning. Fortunately, there are several solutions to help you navigate this challenge, each tailored to different financial situations and timelines. Many of these options can be accessed and approved in as little as 48-72 hours. Let’s explore these options and how they can make your transition smoother.
1. Contingent Sale
A contingent sale allows you to make an offer on a new home with the condition that your current home must sell first. This option is ideal for buyers who need their home equity to fund the new purchase. However, contingent offers can be less competitive in hot markets where sellers favor non-contingent buyers. To strengthen your offer, ensure your current home is already listed and show evidence of serious buyer interest.
Advantages of Contingent Sales
- Leverage Equity: Enables you to use the equity from your current home to purchase the next one.
- Financial Safety Net: Protects you from being stuck with two mortgages if your current home doesn’t sell quickly.
Considerations
- Market Competitiveness: Contingent offers may be less attractive to sellers in a competitive market.
- Timing Stress: The process can be stressful as the sale and purchase must align perfectly.
Case Study: One of our recent clients successfully navigated a contingent sale with the expert guidance of Linda Hernandez, the Klapper Group’s specialist in contingent sales. The client was relocating from Rancho Palos Verdes closer to Torrance, and their home was marketed with an aggressive plan that attracted multiple offers in just days. This ensured they could confidently secure their dream home. Currently, we are working on another contingent sale, helping a client in Coastal San Pedro transition from a condo to a single-family home. With a targeted marketing plan, the downleg sold in under a week, setting the stage for another successful move. READ THE FULL STORY
2. Buy Before You Sell Programs
Buy Before You Sell programs are becoming increasingly popular, offering a streamlined solution for homeowners. These programs allow you to purchase your next home first, without waiting for your current property to sell. How does it work? Typically, a third-party company or lender will make a cash offer on your behalf for the new home, enabling you to close quickly and avoid contingencies. Once you’ve moved, they assist in selling your previous home—often at market value—and you can repay the advance from the sale proceeds.
With the Klapper Group’s direct access to some of the most competitive Buy Before You Sell programs in the South Bay and nationwide, we can help you unlock the flexibility you need. These programs also work for state-to-state moves, ensuring that wherever life takes you, we’ve got you covered.
Advantages of Buy Before You Sell Programs
- Flexibility: Allows you to move at your own pace without being dependent on the sale of your current home.
- Competitive Edge: Makes your offers more attractive to sellers by removing the contingency.
Considerations
- Program Fees: Some programs charge fees that may reduce your overall net proceeds.
- Qualifications: Not all homeowners qualify for these programs, depending on credit and financial requirements.
Weighing Costs and Goals
When considering a Buy Before You Sell program, it’s essential to weigh the service fees against the final outcome. Convenience and peace of mind do come at a price, but achieving your goals—like securing your dream home on your timeline—can make it worthwhile. Having a well-thought-out strategy before making a move is crucial, and our team is here to help you craft that strategy with confidence.
3. Bridge Loans
A bridge loan is a short-term loan designed to “bridge” the gap between buying your new home and selling your current one. Unlike Buy Before You Sell programs, a bridge loan is a traditional lending product. It provides temporary financing, typically secured by your current home, allowing you to access the equity you need for the new purchase. Once your current home sells, the proceeds are used to pay off the bridge loan.
Advantages of Bridge Loans
- Immediate Funds: Provides access to your equity before your home is sold.
- No Need to Delay: Enables you to purchase your new home without waiting for your current property to sell.
Considerations
- Interest Costs: Bridge loans often come with higher interest rates compared to traditional mortgages.
- Risk Management: Requires careful financial planning to avoid being stuck with two large payments if your home doesn’t sell quickly.
Weighing Costs and Goals
Like Buy Before You Sell programs, bridge loans require careful evaluation. While they offer significant advantages, such as immediate access to funds, it’s important to assess whether the costs align with your long-term financial goals. Our team will work with you to ensure that a bridge loan fits seamlessly into your overall strategy.
Key Differences Between Bridge Loans and Buy Before You Sell Programs
- Structure: Bridge loans are direct loans secured by your home, while Buy Before You Sell programs often involve a third-party intermediary purchasing your next home outright.
- Flexibility: Buy Before You Sell programs can simplify the process by handling both transactions, while bridge loans give you direct financial control.
- Risk: Bridge loans require careful financial management since you’re responsible for servicing the loan until your home sells, whereas Buy Before You Sell programs may reduce financial stress by handling those logistics for you.
4. Cash Offer Programs
Cash offer programs enable you to present an all-cash offer on your next home, making your bid more competitive—especially in tight markets. These programs often partner with institutional cash buyers who purchase the home on your behalf. After you’ve sold your current home, you buy the new one back from them. This approach allows you to avoid contingencies, negotiate better terms, and move faster than traditional financing permits.
How Do Cash Offer Programs Work?
Cash offer programs typically involve a third-party service or lender stepping in to purchase the new home outright on your behalf. The third party secures the property for you, and once your current home is sold, you repay the third party and officially take ownership. This method eliminates the need for contingent offers, giving you a significant edge in competitive markets.
Rates and Costs
The rates and costs associated with cash offer programs vary depending on the service provider. Some programs charge a fee based on a percentage of the home’s purchase price, while others may incorporate the costs into a standard lending or transaction fee. It’s essential to review these costs with your real estate professional to determine which program provides the most value.
Advantages of Cash Offer Programs
- Competitive Edge: Sellers are more likely to accept a cash offer over a financed one, as it typically comes with fewer contingencies and a faster closing timeline.
- Speed: With cash in hand, you can close on a home quickly and avoid lengthy loan approval processes.
- Flexibility: Some programs allow you to move into your new home immediately while your old home is being sold.
Considerations
- Program Fees: Understand the associated costs and compare them with other financing options.
- Market Fit: These programs work best in competitive markets or when time-sensitive purchases are required.
The Klapper Group’s connections to innovative Cash Offer programs give our clients a significant edge, making even the most complex transactions achievable. Whether you’re upgrading locally or relocating across state lines, we’ll help you navigate the process with confidence.
5. Home Equity Line of Credit (HELOC)
If you’ve built substantial equity in your current home, a Home Equity Line of Credit (HELOC) could be a viable option. This line of credit allows you to borrow against your home’s equity to cover the down payment for your new residence. Unlike a bridge loan, HELOCs are revolving credit lines that may offer more flexible repayment terms.
Pros of Using a HELOC
- Flexibility: Borrow only what you need and repay as you go, similar to a credit card.
- Lower Interest Rates: HELOCs often have lower interest rates compared to other types of loans.
- No Need to Sell First: You can access your equity without immediately selling your current home.
Cons of Using a HELOC
- Variable Rates: Many HELOCs have variable interest rates, which could increase over time.
- Risk to Your Home: Your home serves as collateral, so defaulting could put it at risk.
- Fees and Costs: Some HELOCs come with application fees, annual fees, or closing costs.
How Much Do You Need to Tap Your HELOC?
Before applying for a HELOC, calculate how much you need to borrow for your down payment or closing costs. Lenders typically allow you to borrow up to 80-90% of your home’s equity, minus any outstanding mortgage balance. For example, if your home is worth $500,000 and you owe $300,000, you may be able to access $100,000-$150,000 through a HELOC.
Find Out Your Home Equity Health
Before diving into a HELOC, it’s essential to understand your home equity health. A Realtor’s appraisal can provide a clear picture of your home’s current market value, helping you assess how much equity you can leverage.
How to Start the HELOC Process
- Check Your Credit: Ensure your credit score meets the lender’s requirements.
- Assess Your Equity: Estimate your home’s current value and calculate your available equity.
- Shop Around: Compare terms, interest rates, and fees from multiple lenders.
- Gather Documentation: Prepare proof of income, tax returns, and information about your existing mortgage.
- Apply: Submit your application and wait for the lender’s approval.
- Access Funds: Once approved, you can draw from your HELOC as needed.
Making the Right Choice
Choosing the best path depends on your financial situation, market conditions, and timeline. To determine which option aligns with your needs:
- Assess your current home’s market value and equity.
- Consult with a real estate professional who understands your goals.
- Speak with a lender to explore financing options, including bridge loans or HELOCs.
- Leverage the Klapper Group’s expertise in contingent sales, Buy Before You Sell programs, and Cash Offer solutions to craft a customized strategy that fits your needs.
Final Thoughts
Transitioning between homes doesn’t have to be overwhelming. With the right strategies and support, you can unlock your equity and move into your next chapter smoothly. Whether it’s leveraging a contingent sale, tapping into a bridge loan, or taking advantage of innovative Buy Before You Sell programs, there’s a solution tailored for every homeowner.
The 2025 real estate market is forecasted to remain competitive, and you need both a plan to purchase leveraging your current home’s equity as well as a strategic, experienced marketing plan to showcase your current home at top value for a quick, top-dollar sale. That’s where we come in.
It’s important to avoid the temptation to Google programs and start sending your contact information around the internet. Just like shopping for a car online, this approach can result in dozens of agents or lenders calling you, creating unnecessary stress and confusion. Instead, let our team guide you through trusted, vetted programs to ensure a seamless experience.