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SHOULD I SELL, My Current Home... BEFORE BUYING A NEW HOME?

(NOTE THIS PAGE IS UNDER CONSTRUCTION... COME BACK SOON TO SEE THE COMPLETE PAGE'S INFORMATION)

Thinking back... buying your first home seemed like such an accomplishment.  If you are like most folks you made some compromises before finding the perfect place and you may have also thought each subsequent move would just be so much easier!

However, each "next move" is typically prompted by changing, and usually even more specific needs, desires, and expectations. Plus along with still having to balance all of the items on your wish list, and making more budget driven compromises, most also want to ideally sell your existing home as part of the equation!

The moving process typically starts with taking one or two days to look at a few potential new homes. In an ideal world you find several places you love, that check off almost all of your wish list items, and also fall within you budget.  Then you obtain a pre-approval letter from your mortgage loan officer, get your current home ready to sell, take it active, have multiple offers within only hours or days to choose from.

This all means you could... Place your current home under contract with a closing date in 30-40 days, Ask for free possession of your current place for a few days after closing to move out, Have great clarity on the amount of net proceeds from your sale of your current home that you can put towards the purchase of the next home. This all sounds perfect so far!

Then you would... Visit a few potential new homes, maybe take a second look at some of the previous places that are all still available, Find your perfect new home, Submit an offer that's accepted without any counter offers and includes closing the same day you close on your current home, with you getting possession at closing so that you move right in and start the next chapter! This all sounds so easy right... Kind of Like that proverbial "Free Lunch," that just sounds too good to be true!

Why Would Anyone NOT Want To Sell Their Current Home BEFORE Buying The Next Home?

IN THE REAL WORLD THOUGH, DECISIONS ARE MORE GRAY THEN BLACK AND WHITE!

It's not hard to find houses the fit your budget... It can be exceptionally hard though to find the places the check off each of your must have requirements, let alone some of your "nice to have" items! While the basic's like bedroom and baths can complicate your search, other items are often times, what Mitch call's Limiting Factors that can in a best case take your searching component from weeks, to literally months and even years!

Examples Of 4 Types Of Limiting Factor Requirements That Will Lengthen The Time It Takes To Find A Place
1 or 2 Limiting Factors Can Make It Difficult To Find The Right Place. And, If You Have 3 Or More Of These Limiting Factors, Especially In 2 Or More Different Types of Limiting Factors... Then This Is Why There Are Times U May Want To Consider Buying Your Next Place, Before You Sell Your Current Place!

WHAT YOU NEED TO KNOW...

If You Want To Consider Purchasing A New Home Before You Sell

What Is a Sale Contingency?

Most offers contain numerous contingencies which is when your offer to buy a places, depends on something else happening within a certain timeframe. Typical Contingencies can include:

  • Obtaining a Mortgage
  • Satisfactory Inspections
  • Obtaining Insurance
  • Approving Home Owner Association (HOA) Documents, Rules & Regulations
  • The Property appraising for the Purchase Price or more
  • The closing of the sale on your current home, that's already under contract, to your Buyer

Another type of Contingency is a based on selling your current property first. In Indiana, there are two types of contingencies related to the sale of the buyer's current home. The most common type, the First Right To Purchase, gives the Buyer typically 30-60 days (depending on what was negotiated as part of the offer) to place their current home under contract. 

During this 30-60 days contingency period, the Seller's must change the status to reflect that you have accepted an offer that's contingent on the Buyer's ability to put their current place under contract. The Sellers can continue to show the property to other potential buyers with the hope of obtaining another offer that's has better terms for the sellers. However, most Sellers are advised that showing activity will immediately drop with the change in status which is why most Sellers may not be open to this type of contingency! In a perfect world, once your current home is under contract with a buyer, then the offer on your new place proceeds towards closing, per the timelines in the offer. The closing on the new place remains subject though to the closing of your current home.

Should the Seller's accept this contingency as part of an offer, and then receive a subsequent offer with terms that the Sellers are willing to accept, then the Sellers notify the buyers with the accepted contingent sale that they are prepared to move forward with another Buyer. The Buyers with the contingency typically have 24-48 hours (depending on what was negotiated as part of the offer) to either sign a mutual release and get their Earnest Money back or to sign an amendment to remove the First Right Contingency and then immediately move forward with the closing of the purchase per the timelines in the offer. Once your current home is under contract, then the offer on the new place is subject to the closing of your current home. Note: If the Buyers remove the contingency, and the Buyers subsequently are unable to obtain a mortgage on the new home, regardless of the reason, then the Sellers are entitled to keep the Buyer's earnest money. 

If the Buyers are unable to sell their current home during the negotiated amount of days, then the Sellers and Buyer's can choose to negotiate a new timeline for the Buyers to sell their current place, or either the Buyers or the Sellers can simply walk away from the purchase agreement. If the Purchase Agreement ends, then the Buyers are entitled to get their Earnest Money back.

A Seller's Willingness To Accept A First Right Contingency Depends on:

  1. The Seller's level of motivation to sell
  2. How long the home has been on the market
  3. Current market conditions

Is It A Buyer's Market Or Seller's Market Today:

  • In a Buyer’s Market, there are more properties available then active Buyers. So, homes stay listed longer, and sellers may be more open to contingent offers.
  • In a Seller’s Market, there are more active Buyers then available properties. So, homes stay listed longer with low inventory and high demand, sellers often prefer buyers ready to close immediately.

Note: Even In Buyer's Markets There Could Be Properties, That Because Of An Especially Desirable Location, Uniqueness or Very Competitive Pricing, Will Sell As If It's A Seller's Market!  And, Conversely Even In Seller's Markets There Could Be Properties That Because Of an Undesirable Location, Uniqueness, or Unrealistically High Pricing, Will Sell As If It's More Of A Buyer's Market!

Note: Even in a seller’s market, it could be worth submitting a thoughtful contingency offer—it may still work if the seller is motivated.

Buying before selling depends on your mortgage pre-approval and debt-to-income ratio.

Carrying two mortgages is often stressful, but it may be possible if:

  1. You own your current home outright
  2. Your existing mortgage payment is low
  3. Your income can cover both mortgages

Your lender can clarify if selling your current home is a condition in your pre-approval, and in many cases, that requirement can be removed.

If you plan to use equity from your current home for your next purchase, there are several ways to access those funds before selling:

Retirement Plan Funds

Many retirement plans (401(k), 403(b), etc.) allow you to:

  1. Take out a loan or even withdraw funds without penalty for the purchase of a home
  2. Redeploy the funds back into your retirement plan within 60–90 days after your current home sells

This can be a temporary way to access needed funds for a down payment while avoiding long-term penalties or taxes if properly managed.

Home Equity Line of Credit (HELOC)

  1. Draw from an existing HELOC for your down payment
  2. Make interest-only payments while owning your current home
  3. Repay the HELOC after selling your home

⚠️ Tip: You cannot open a HELOC once your home is listed for sale.

Bridge Loan

  1. Temporary financing using your current home’s equity as collateral
  2. Useful in competitive or time-sensitive markets
  3. Requires an appraisal and often carries a higher interest rate

A HELOC can also serve as a bridge loan, so you may not need both.

Piggyback (Second) Mortgage

  1. First mortgage: 80% of the purchase price
  2. Second mortgage: up to 10%

Why a piggyback mortgage is often better than paying down principal on an 80% mortgage:

  1. Separate Loan: The second mortgage is fully repaid once your current home sells.
  2. Lower Monthly Payment: Only one mortgage remains at a lower balance. Paying down principal on a single 80% mortgage doesn’t reduce your monthly payment as effectively.
  3. Better Cash Flow: Structuring the second mortgage separately gives immediate relief on your monthly payment once repaid.
  4. Practical Outcome: Buyers with 20% equity end up with just one lower mortgage payment, similar to making a larger down payment upfront.



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Real Clients, Real Results, Real Reviews...

I always felt relaxed and like his only client...

It is without hesitation that we recommend Mitch Rolsky as a real estate agent for both the buy and sell side.

We have worked with Mitch twice in the purchase of a downtown Indy home and then with the subsequent sale of the same house just over 2 years later. Mitch's guidance allowed us to purchase the home in a desirable location at a price level that was at the lower end of the market range at that time. During the sale of the home, Mitch paid no attention to what the home was sold for earlier but focused on what the market would bear. Mitch focused on selling the value of the home and the location as opposed to price. He knows the market extensively and set a selling price and sales strategy that worked perfectly in a softening seller's market.

We moved because of a career change which forced us to move away during the sales process. Mitch took care of everything from there....in essence, we left our entire belongings in the care of Mitch. Friendly, detailed, trustworthy, knowledgeable and professional are but a few of the attributes of Mitch. Thanks Mitch....

ANNIQUE & MARTY G.

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