3 Ways To Buy A Home Before You Sell Yours

In Metro Detroit, like many other areas in the country, we are facing the challenge of low inventory. There simply is not enough on the market to satisfy demand even with higher interest. The low inventory problem is especially tough in Birmingham, MI and in Bloomfield Hills, MI. So if you are in the market for a new home in Birmingham or Bloomfield Hills you need the right strategy to you can buy the home you want when you want it. Here are 3 strategies we are using right now with our clients. 

Bridge Financing

How it works: Bridge financing, also known as a bridge loan, is a short-term loan that can help you cover the gap between buying a new home and selling your current one. It provides you with funds to make a down payment on the new home while using the current home as collateral.

Pros:

• Allows you to make a competitive offer on a new home without being contingent on the sale of your current one.
• Provides flexibility in the timing of your move.

Cons:

• Interest rates on bridge loans can be higher than traditional mortgages.
• Qualifying for a bridge loan may require demonstrating the ability to carry two mortgages temporarily.

Our preferred lenders can help you navigate your options and help you determine if a bridge loan is right for you. If you need to be connected to a local lender here in Metro Detroit, reach out to Jeff Higgins at jeff@higginspartners.com.

Home Sale Contingent Offer

How it works: With a home sale contingency, you make an offer on the new home contingent on the sale of your current one. However, in your offer you allow the seller to keep marketing their home for sale. This allows the seller to continue trying to sell the property and accept another offer if it comes without losing you immediately.

Pros:

• Provides some protection in case another buyer makes a competitive offer.
• Gives you time to find a buyer for your current home.

Cons:

• Sellers may be hesitant to accept offers with contingency.
• You might face time pressure to sell your current home

We ensure our clients set up this contingent offer correctly and make sure the earnest money deposit is returned in the event your planned home purchase falls through and your purchase agreement becomes null and void.

Lease Back from the Buyer

How it works: In your home sale contract, negotiate a lease back agreement with the buyer. This allows you to remain in your current home for a specified period after closing, providing more time to find and move into your new home.

Pros:

• Provides a buffer period to secure your new home before moving out of the current one.
• Offers a solution to the challenge of coordinating closing dates.

Cons:

• Buyers may not be open to a lease-back arrangement.
• You'll need to negotiate terms, including rent and the duration of the lease-back period.

Important Considerations

Financial Readiness: Ensure you are financially prepared to manage two mortgages or alternative financing arrangements. We suggest you get with your financial planner or wealth advisor. Separately if you are looking for a top-notch financial planner or wealth manager reach out to Jeff Higgins at jeff@higginspartners.com and we will provide a list of our trusted services providers.

Market Conditions: The success of these home buying strategies can be influenced by the current real estate market conditions so stay informed and understand your risks.

Open Communication: Maintain transparent communication with all parties involved, including your real estate agent, potential buyers, and sellers. This is key. Communication is paramount. 

Before implementing any strategy, it's crucial to consult with a real estate professional who can provide personalized advice based on your specific situation and the market in Metro Detroit.

If you are looking for more strategic tips on homebuying in this market, contact Jeff Higgins at jeff@higginspartners.com.