Buy Before You Sell: A Bridge (Loan) to Your Next Home Purchase

Find Your Next Home. Move Only Once. Make the Home You Sell Sparkle and Look Its Best!

When it comes to the traditional real estate journey, selling your current home before purchasing a new one is typically the recommended path. However, there are situations where life simply does not cooperate.

When that happens, finding your dream home might necessitate a different approach.

The Challenge of Buying First

Buying a Next Home Requires Careful Coordination to Assure a Successful Conclusion

Most real estate professionals advise selling before buying for good reason. When you make an offer contingent on selling your existing property, you're automatically at a disadvantage in negotiations. Sellers generally perceive contingent offers as risky, and if they do consider your offer, you'll likely pay a premium for them to take that chance.

The reality is that many sellers simply aren't willing to accept this uncertainty regardless of the price. Additionally, most homebuyers need the equity from their current property to qualify for financing on their next home, making the buy-first strategy not just difficult and costly, but often financially unfeasible. That is where a Bridge Loan can become a path to success.

A Real-World Success Story

Recently, we worked with a client who found himself in this exact situation. He discovered his perfect home in a coveted San Francisco Bay shoreline development—a community where properties rarely become available.

Fortunately, our client had two significant advantages: minimal debt on his existing home (providing substantial equity) and considerable savings. To navigate this complex situation, we reached out to financing specialist Casey Sullivan at The Sullivan Group to explore potential solutions.

When You Find Your Perfect Next Home, the Seller Doesn't Want To Wait Around for You to Sell Your Current Home!

Bridge Loan Solutions: Expert Insights from Casey Sullivan

Casey explains the benefits as well as the downsides of bridge loans as a solution for buying before selling:

"Essentially, a bridge loan taps into your current home's equity, providing you with short-term funds. We're talking about potentially accessing up to 80% of your home's value, giving you the power to make a strong offer, cover down payments, or handle those initial moving and repair costs. Imagine bypassing the need for a sales contingency, making you a more attractive buyer in a competitive market.

But they are not an 'all things for all people' kind of solution. Bridge loans are short-term, typically repaid within 3-12 months, often with a balloon payment at the end. They also come with higher interest rates than traditional mortgages, and require you to have at least 20% equity in your current home. Still, for many, the flexibility and buying power they provide outweigh these factors."

In his case, we negotiated the purchase of our Buyer's next home with a non-contingent offer and used the typical escrow period to prepare his home for sale. This allowed us to take advantage of the Spring market, and allowed him to move directly from his current home to his next one. In addition, his previous home was painted, freshened-up, and staged to look its absolute best, unburdened by showing appointments and dishes in the sink.

But Casey told me that, before considering this as a serious option, he and any potential buyer must take a close look at their specific situation.

For example, If you need a lump sum for a down payment, or require funds to cover expenses while transitioning, a bridge loan could be a solution. If there is not a lot of equity in the home, this may not be a viable option.

"We'll outline the repayment terms clearly, ensuring you're comfortable with the timeline and payments. We also can discuss alternatives like HELOCs, which might be a better fit for ongoing needs or possibly another option altogether.

The goal is to help you achieve your homeownership dreams as efficiently and pain-free as possible. After defining the details of that dream, we discuss the options and determine if a bridge loan is the right financial tool for you."

With Many Financing Options Available Today, You Should Look At All Your Options With a Professional

Is a Bridge Loan Right for You?

Bridge loans can be an excellent solution for homeowners who:

• Have found their dream home but still must sell their current property

• Have substantial equity in their existing home (typically at least 20%)

• Can manage potentially higher payments for a short period

• Want to make non-contingent offers, especially in competitive markets

• Have a clear, realistic plan to sell their current home during the bridge loan timeframe

  
  

Next Steps

If you're considering buying before selling, we recommend scheduling a consultation to evaluate your specific situation. Our team works closely with financing specialists like Casey Sullivan to help you navigate these complex transactions successfully.

Casey Sullivan and his Team Make Sure You Get the Best Program for Your Particular Situation

Looking to make your dream home a reality without selling first? Contact Casey Sullivan today to explore bridge loan financing or any other mortgage loan options. Mention this article and get a $1000 credit at closing on this or any mortgage financing through Casey at The Sullivan Group