Coordinating a Simultaneous Sale and Purchase
More than half the move-up buyers I work with are facing the same problem: they need the equity from their current home to buy the next one, but they do not want to sell before they have somewhere to go. There is no perfect solution, but there are several workable structures, and the right one depends on your financial position and risk tolerance.
The Core Challenge
If you need the proceeds from your current home to fund the down payment on your next one, you have a sequencing problem. You cannot fully commit to buying until you know you have sold. But sellers of homes you want to buy are often reluctant to accept offers contingent on the sale of another property.
The stronger your financial position, the more options you have. If you can qualify for the new mortgage without selling first, or if you have bridge financing available, you can act more decisively.
The Contingent Offer Option
A contingent offer lets you offer on a new home with the condition that your current home must sell first. Some sellers accept this, especially if your home is already under contract. Most sellers in competitive conditions will not wait for a buyer who has not yet sold.
Arizona's AAR contract has a Buyer Contingency Addendum specifically for this situation. It gives the seller the right to continue marketing the home and accept another offer (with a notice period for you to either remove the contingency or cancel) if a better offer arrives.
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Bridge Loans and HELOC Options
A bridge loan is short-term financing that lets you access equity in your current home to fund the purchase of the next one, before your current home sells. Not every lender offers them and they carry higher rates than standard mortgages, but they eliminate the sequencing problem entirely.
A HELOC (Home Equity Line of Credit) on your current home, if available, can serve a similar function -- drawing funds for closing and then repaying from sale proceeds. Both options require enough equity in your current home and the income to qualify for both housing payments temporarily.
Rent-Backs and Closing Coordination
A rent-back is when you sell your home but negotiate the right to remain as a tenant for a set period after closing. This gives you time to close on your next purchase before you have to move. The buyer of your home receives possession later; in exchange, you often agree to a favorable price or terms.
When both transactions are timed together, closing date coordination between two escrows becomes critical. I have managed many of these as both listing agent and buyer's agent. The key is clear communication between both title companies, both lenders, and both agents to make sure the timing holds.
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Written by
Jon Hegreness
REALTOR / Associate Broker, Howe Realty. AZ License BR540940000. 24 years in Phoenix Valley residential real estate.
I am a full-time Valley associate broker, not a call center. If anything here raised a question about your own move, ask me and you get a straight answer from the person who wrote this, every time.
Common questions
- Can I make an offer on a new home before selling mine?
- Yes, with a buyer contingency addendum. Whether a seller accepts it depends on market conditions and how far along your current home is in the process. A home already under contract is much more convincing than one not yet listed.
- What is a bridge loan in real estate?
- A bridge loan provides short-term financing against your current home's equity to fund the purchase of your next home before the first one sells. It eliminates the contingency problem but comes at a higher cost and requires you to qualify for both payments.
- What is a rent-back agreement?
- A rent-back allows you to sell your home but remain in it as a tenant for an agreed-upon period after closing. You pay rent to the new owner during that time. It gives you flexibility to close on your next purchase without moving twice.
- How do I coordinate two closings so I do not end up homeless for a week?
- Work with agents on both sides who have done this before and communicate proactively with both title companies and lenders. Build some buffer into your dates. A same-day closing on both transactions is achievable but requires all four parties to be coordinated and the funding to move correctly.
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