On One Hand

The best way for most people is to first determine whether the project is feasible WITHOUT falling in love with any particular house. If it is feasible then you put your current house on the market SUBJECT TO SELLER OBTAINING SUITABLE HOUSING. When you get an acceptable offer you negotiate a 2 week "Looking Period." If you find an acceptable house in that period then both houses can be put on the same closing schedule allowing you to move out the day before your buyer moves in. If you don’t find a suitable house within 2 weeks, you request another 2 weeks from your buyer or they may cancel – buyer’s choice. I once had a situation like this that extended 2 weeks at a time from mid August to Thanksgiving before the right house came on the market. If the buyer does choose to cancel, the house goes back on the market and you sit patiently until you get another buyer. NOTE: I have described this process in common language but this is actually done in writing as part of a carefully written purchase agreement.

There are other ways to solve the problem none of which work as well (or at all) for most people:

 

• You can move twice. Sell your house, move to a rental, and then move into your new house when you find the right one. The advantage is that you retain maximum negotiating power both as a buyer and as a seller. The disadvantages are that you have to move twice and you are selling your house without knowing exactly which house will replace it.

 

 

• You may be able to get a "Swing Loan" aka "Interim Loan". The advantage of this is that it makes some of your equity available for your purchase. The disadvantages are that you don’t get all of your equity out, loan fees are expensive, and you are still left with a vacant house to sell. Can be risky.

 

 

• You can put the cart before the horse by falling in love with a house, put an offer in on it contingent upon you selling your current house. The only advantage is the emotional comfort of falling in love with your next house before you let go of your old house. The disadvantages are: most sellers won’t even entertain an offer contingent on selling another house, it trashes out your purchasing power (in the event that the seller would entertain such an offer), and it trashes out your negotiating power as a seller.

 

 

• You can liquidate investments to fund the purchase and then replace the cash when the old house sells.

 

 

• A wealthy friend or family member can act as the bank for interim financing.

 

In terms of your negotiating power and your stress level, the worst thing you can do it to fall in love with the new house first. If you find yourself in this regrettable situation (sometimes life just happens) you will need a seasoned agent more than ever. And under no circumstances should it be the agent representing the seller of the house you want to buy (See my earlier blog about how to choose an agent).