If you’ve heard it once, you’ve heard it a thousand times. It’s GREAT to be a home seller right now and TOUGH to be a homebuyer. But I imagine that if it were easier, we’d have more homes for sale.
So many sellers feel STUCK. They want to take advantage of the market. They’re willing to move. But, where do they go? And how do they sell one home while buying another WITHOUT ending up homeless?
Let me start by reiterating my first point: If it were easy, we’d have a lot more homes for sale. CHOOSING to sell in this market is NOT for the faint of heart! While there’s the joy of cashing in to look forward to, there’s also the pain of preparing your home to sell, moving (sometimes twice,) and settling into a new place/town/neighborhood. And this market just makes all of it harder.
So, what kinds of options do you have as a seller? Here are a few that I’ve used successfully with my sellers.
Bridge Loan
A bridge loan is a short-term loan used to bridge the gap between buying a home and selling your current one. It’s standard to borrow a maximum of 80% of both homes’ values.
Of course, your lender will have to verify things like your debt-to-income ratio, how much equity you currently have in your home, your credit score, and sometimes your household income. This verification step can take away any financial contingencies in an offer you might be writing. However, sometimes these bridge loans come with higher interest rates and can cost a little more out of pocket as a homeowner. If this sounds interesting to you, reach out to your favorite local lender for details. It might be just the ticket for you.
Infinity Banking
Infinity banking is a newer, riskier option, but it’s one worth discussing. It’s a concept, not a product. Basically, this concept uses your permanent cash value life insurance (whole, not term) as your own banking system. It can leverage you and give you tax deferred opportunities; however, it requires discipline, and you have to qualify to do it. Infinity banking USES life insurance but it’s NOT life insurance. You become your own bank, loaning yourself money from your whole life insurance policy. (Be sure to talk with a CPA about tax strategies if you consider this option!)
Rent-Back Agreement
This is the least risky option of all, but it’s the one that requires the most flexible buyer. After all, you’re asking if you can stay in, or “rent back,” your home from the buyer AFTER the final closing. This allows you to have the cash on hand and NOT write an offer contingent on the sale of your home. (Remember, you already sold and closed on the home.) For some buyers, they’re willing to wait (a specific amount of time) in order to help out the sellers and get the home they want. Other buyers just might not have the housing flexibility to do so.
In a nutshell, all signs point to the housing market staying much the same as last year: highly active with little inventory. There are outliers that will play a part in how things shake out, but we don’t see a huge influx of inventory that we need to loosen things up. Some of these strategies can make it possible for you to make the real estate moves you want to make now no matter what’s going on with the market.
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