How to Buy a Home in California and Sell Your Current Home at the Same Time
Buying or Selling First: What's the Smarter Move?
Buying Before Selling:
In a competitive environment like California, this strategy would appeal to many buyers who dread missing out on the right house.
Pros:
1. Lock in the Right House Quickly:
Inventory remains tight—active listings in California were about 30% lower as of early 2024 than pre-pandemic levels (Redfin). When you're ready to Buy a Home in California, buying before selling allows you to strike faster when the right property arises.
2. Skip the Double Move and Storage Expense:
Buying Before Selling allows you to move into your new house. If you buy first, you'll skip the expense of short-term rentals and storage, reducing hassle and cost.
3. More Flexibility in Transition Time:
Most closings give you 30–60 days before the transaction becomes final, which means you have time to plan, remodel, move in, etc., at your own pace.
Cons:
1. Risk of Dual Mortgages:
As of mid-2024, mortgage rates were near 7% (Bankrate). The burden of two mortgage payments while you wait for your home to sell could increase your payments significantly.
2. Complicates Financing:
If you Buy a Home in California before selling, you may need alternative financing, such as a
Bridge loan
HELOC
This temporarily raises your debt-to-income ratio (DTI) while you wait for your current home to sell, which can affect the approval of your loan.
3. Pressure to Sell Fast:
If you are financing two homes simultaneously, you may end up negotiating with buyers for lower prices or less advantageous conditions because of the urgency of completing your sale.
Selling Before Buying
For most homeowners, selling before buying makes the most sense regarding finances and may provide a stronger negotiating position.
Advantages:
1. Access to Equity:
Selling before you buy releases home equity, part of over $32 trillion in home equity as of Q4 2023 (Federal Reserve), which you can then use as a down payment when you buy a home in California.
2. Better Mortgage Terms:
With less debt rated through DTI and more cash reserves, lenders may offer better rates. Additionally, your offer is likely more appealing to sellers if they don't have to wait for your house to sell.
3. Avoid Dual Expenses:
Avoid the risk of paying two mortgages, bills, and taxes, which creates more space for financial planning.
4. Stronger Purchase Offer:
Being mortgage-ready with cash in hand helps in California's multiple-offer bidding wars—crucial if you're looking to Buy a House in California, where sales prices will likely exceed asking prices.
Disadvantages:
1. Temporary Housing:
Without a new home under contract, you may need to rent something or live with family, which is an inconvenience but sometimes a necessary step.
2. Double Moving Expense:
Two moves and potential storage space can be expensive. A local move averages about $1,250, and long-distance moves averaging about 1,000 miles run $4,500 and $5,000 on average(Source).
How to Successfully Buy a Home in California and Sell at the Same Time?1. Analyze Your Situation
Work with an experienced real estate agent adept at helping clients buy and sell. They can help you analyze the current market and real estate values as you assess timing and outlook—while keeping both transactions in sync.
2. Understand When to Use Contract Contingencies
If your next purchase will rely on the proceeds from your existing home, you should convey a home-sale contingency. This may protect you financially but weaken your offer if there is competition for the property. Your odds improve when you have a good home priced appropriately in the market and ready to show.
3. Think about a bridge loan
Bridge loans provide short-term financing by leveraging equity in your current home to fund the next. They're ideal when you need flexibility but come with short terms, higher rates, and strict qualification requirements.
4. Plan Budget
You may include taxes, relocation expenses, and, if necessary, short-term housing in your budget beyond the price of the home. A financial cushion ensures you're covered if closings don't align. Explore rent-back arrangements or temporary housing alternatives to handle discrepancies between transactions.
Conclusion
Choosing to Buy a Home in California while selling your current one can be complex—but with expert guidance, it's achievable. Trust Kim Eckert Homes to streamline your journey with smart strategy, timing, and support—helping you buy and sell seamlessly, even in California's competitive housing market.
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