Help! I Sold My House in 24 Hours, What Now?
We all know the Denver real estate market is on fire right now and houses are selling at record speeds — often with bidding wars for sales above the asking cost. So what happens if you put your home on the market and 24 hours later it is going under contract?
Selling your house before purchasing a new one can be a scary prospect. Will you be out on the street? What if you can’t find a replacement home? This is a question we get at Frontgate Realty Group on a regular basis these days. But Before you freak out, know you have options. It just takes a little pre-planning on your part before listing your home.
Consider Bridge Financing
Getting bridge financing is going to be the smoothest option so long as you can get a new home under contract before selling your current one, which in today’s seller’s market is not guaranteed. A bridge loan is a temporary loan secured by your current house to bridge the gap between the sales price of the new house and your new mortgage. It is used in the event you close on a new home before your existing home closes, giving you immediate access to cash during the time between the demand for cash and its availability.
The number one reason to take out a bridge loan in a seller’s market is it allows you to put in a “contingency-free offer,” — translation: you can buy without selling your existing home. This can be an important factor when you go up against a number of buyers in the Denver marketplace for a house. Sellers are more likely to choose offers without a contingency because it means they can close the transaction regardless of whether your home sells.
Ask to Rent Your Home Back From The New Owners
If you decide against taking out a bridge loan, or you take one out but your home still sells faster than you can buy, then asking to rent your home back from the new owners is another option to pursue.
Check with the new owners at the time of negotiation before you go under contract if they’d consider renting your home back to you for a few months while you continue your home search. While this isn’t always going to be possible, it is at least worth pursuing, especially if the new buyers aren’t in a hurry to move themselves or have a second home.
Line Up A Short Term Rental or Airbnb
The least desirable of the three options as it requires moving twice, but it may be a reality in today’s market, is lining up a short term rental or Aibnb for a few months while you search for a new home.
Although not ideal as you’ll have to put everything into storage or move it into your short term rental, if you can’t find a home that meets your necessary for happiness criteria before selling, it is still well worth the hassle of a double move rather than settle for a property you aren’t going to love.
Depending on your circumstances (if you work remotely for instance or don’t have children) consider the option of renting an Airbnb in another city for a few months and giving yourself a digital nomad experience — of course whether this remote living option is safe or responsible will also depend on the progression of the coronavirus pandemic.