Categories
Real Estate TipsPublished October 6, 2025
Downsize, Upsize, Buy and Sell Now!
{original post 3/1/2023}Looking to Downsize, Upsize, Buy and Sell Now? Here’s how: Do you want to buy a new home but need to sell your current house first? A number of people find themselves in this boat and are simply overwhelmed with the process. Do I buy first? Sell first? What should I do? There are several ways you can make this move, some of which will be more comfortable, others of which will be more profitable. There is a sliding scale between comfort and profit as depicted in the graphic below. You will have to determine where on the scale you want to be and realize that there are financial consequences depending on where you chose to land. We will go through each method starting with the most comfortable and moving to the most profitable.  1.First, you must ask yourself if you even need to sell your house in order to buy the next home. If you can afford to keep your current house and buy your next house, well hey, that would be pretty comfortable! The key is you have to be able to afford both mortgages. Another variation of this method is keeping your current house, turning it into a rental, and using the new rental income to help you qualify for the purchase of the new home. This is something we have both personal and professional experience with, and we’d be happy to walk through this option with you. 2. Most people will need the equity from their current house to buy their next home. The comfortable way to go about making a move in this situation is to shop for homes first, find one you like, then make an offer on it contingent upon selling your current house. As a homeowner, this is more comfortable because you haven’t had to do the hard work of getting your home ready for the market, listing it, getting offers on it to sell, move twice, or put your earnest money deposit at risk. The downfall of this strategy is that if you do find a house you like, the seller will be less likely to accept an offer from you if your house is not sold or even listed on the market yet. This means that you will need to incentivize the seller to take your offer by paying more for the house or conceding on other terms. Furthermore, once the contingent buyer is under contract on their replacement property, it puts undue pressure on them to sell their home quickly, often resulting in a lower sales price and more concessions in order to prevent themselves from losing out on their new home. As you can see, this strategy has some financial drawbacks. So, let’s slide a little further down the scale toward profit. 3. Selling contingent upon finding a suitable replacement property. This option is a little more profitable than the second option, therefore, it’s a little less comfortable. Essentially, you list the house for sale first and tell the buyers that the sale is contingent upon the seller (you) finding a suitable replacement property. We have a contract called the Seller’s Purchase of a Replacement Property form we use to protect our clients in this situation, so if you do not find a replacement, you can back out of the contract. This will strengthen your offer to buy, however, it is less desirable for potential buyers of your home because you could back out of the deal if you don’t find something you like. This will shrink the buyer pool for your home, which can sometimes limit your sales price. 4. If you are relying on the equity in your home for the down payment for your next home, you might not need to sell right away. One option would be to get a home equity line of credit on your property to pull out a chunk of your equity in the home to use as a down payment or pay off other high interest debt such as credit cards, car loans, or student loans to help your Debt To Income Ratio (DTI) so you can better qualify for a new home. This method has two major restraints. First, you must have enough equity in your home for this to happen. Some banks will only allow up to 80% Loan to Value. Second, you must qualify for the loan to purchase a new home and the new HELOC by having enough income to cover the debt service. This option won’t work for everyone, but it could help prevent the stress and financial concessions given in a contingent offer situation. Once you sell your home, you will pay off the HELOC and your first loan and pocket the difference. 5. Now for the least comfortable and most profitable option… sell your current house, move out, then buy your next one. This is the least comfortable option, but it will cause you to net the most amount of money on both ends of the transaction by preventing the stress of juggling two transaction timelines. On the sale, you will be able to sell the home quicker for more money since you won’t be limiting the buyer pool, and you won’t be desperately motivated to sell the home no matter what granting the buyers any number of concessions. On the purchase you will have time to shop, money in the bank, and no desperation to identify and close on a property. We have been successfully able to do a variety of combinations to make the move from our client’s house to their new home smooth and streamlined. There are leaseback options as well, which would allow the seller to rent back the home from the new buyers until their new house closes escrow. This short term rent back gives you time to move into your new home without needing to move twice. We may also be able to get the sellers of your new home to agree to let you move in early before escrow closes. At the end of the day, you have to make a plan. There are so many ways to make a move in real estate, and it’s important to have a strong team who will support you every step of the way to create a firmly established plan with you that will help you achieve your goals. If you want to connect and chat about your next move we are always available to help! Call or text us at: 805-215-5063 |
| Let's Be Social We want to hear from you! Please let us know how we can support you on your real estate journey. Whether you just purchased a new home, want to explore home-buying options, are curious about what your property might be worth, or just want to know more about the market, please reach out! @theschwaegerleteam @savannahsiador_ @closeinslo @your.realtor.slo You can also follow us on YouTube and Facebook for more updates throughout the month. |
|
Are you buying or selling a home?
When are you planning on buying a new home?
Are you pre-approved for a mortgage?
Would you like to schedule a consultation now?
When are you planning on selling your home?
or another way