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4 Solves for Buying Before You’ve Sold

How to pull off a tricky bet — and avoid paying for two homes.

It’s a common situation: You want to move and buy a new home — but you haven’t sold your old one yet. What should you do?

Making an offer on a new home before you’ve sold your own is a financially tricky bet to make. No one wants to be caught between a rock and a hard place — and two homes.

But what happens if you do get caught in limbo? Here are four strategies for getting out of the buying/selling pickle:

1. Rent back from your buyer

One option is to sell your house first, then rent it back from the new owners until your purchase transaction for a new home is completed. Since your buyer will eventually want to move into their new home, this is usually only a temporary fix — but a fix that will remove the hassle of moving to a rental before moving into your new digs. This is also a great option if you need a place to hang your hat if you’re planning any renovations to the new house.

2. Buy on contingency

Include a prior-sale contingency in the purchase contract for your new home. It provides the opportunity to withdraw an offer if your existing home does not sell by a certain date. Forewarning: very few, save for the most desperate sellers, are going to agree to sell to you if you have this contingency in place.

3. Get a bridge loan

If you absolutely have to buy before you sell, consider a bridge loan. Bridge loans enable buyers to move forward with the purchase of a home while their current home remains on the market by borrowing from the existing home’s equity until the proceeds from its sale are obtained.

This is a risky choice, so if you must, it’s best to use it for overlaps of just a few days between closings or, at the most, a few weeks. Though some bridge loans can be extended, they can become extremely expensive if protracted.

4. Rent a place

To avoid this dilemma altogether, sell your house first before you buy. And in the meantime, rent a place and take your time shopping around. Relocating twice in quick succession is not ideal, but it’s definitely a better option than owning two homes. If you get an offer you just can’t refuse, celebrating the sale in a rental won’t be so bad!

If you’ve ever been stuck between two houses, what did you do? Share your stories in the comments below.