Sell First. Move Forward: How to Sell Your Home to Buy the Next One
Why people need to make a move
Nobody wakes up wanting to navigate 2 concurrent real estate transactions. But when the home you live in no longer has enough bedrooms, or the living space no longer fits your family, or the yard that was perfect now feels like it’s too much to tame, a move starts to make sense. In some cases it’s the stairs you no longer want to navigate, you don’t have enough living space for the entertaining you do, or you want a guest suite or a downstairs primary bedroom.
A new job is another common reason, and that can mean your commute has outgrown the neighborhood you chose years ago. Maybe you want a different lifestyle altogether, such as the downtown streets of Wake Forest, more land in Johnston or Franklin County, or a shorter drive to work in Durham. Whatever the reason, the pattern is the same: the home you own needs to become the home you want, and the equity in the current home is needed to make this move happen.
When the sale proceeds (the money left over after your mortgage and closing costs are paid) are needed to buy the next home, the two transactions depend on each other. We are going to walk you through how we make this happen in North Carolina, what choices you have, and what we do to keep the move smooth.
The difficulty of needing to sell before buying
The challenge is easy to state and more complicated to solve. Most often you need the equity that is tied up in your current home, and you cannot close on the new home until your current home has sold and the money has reached your account. A lender looks at your income, your debts, and the mortgage you already have, and in many cases the numbers only work once the old mortgage is paid off. Your sale and your purchase are tied together.
This tie becomes a problem on the buy side because the seller of the home you want is making their own decisions. That seller wants an offer they trust, with a closing date they can count on, from a buyer who is certain to close. An offer that says "we will buy your home if ours sells" gives the seller very little of that, and when another buyer offers a cleaner path, the seller will often take the cleaner path. You lose the home you wanted because of timing rather than price.
North Carolina adds one more wrinkle. The standard Offer to Purchase and Contract used in our state has no home sale contingency, which is a clause in some other states that lets a buyer back out if their current home does not sell. Buyers here rely on the due diligence period and on their own planning to manage that risk. Because the contract gives you no built-in exit tied to your sale, the way you structure the timing matters a great deal.
Options available to the seller
There is more than one way to handle a Sell to Move, and each option trades something for something else. The right choice depends on your equity, your comfort with (and ability to handle) two housing costs for a period, and how quickly you need to move.
A bridge loan or HELOC. A bridge loan is a short-term loan that lets you borrow against the equity in your current home before it sells. A HELOC (home equity line of credit) is a line of credit, secured by that same equity, that you draw from as you need it. Either one can cover the down payment on the next home, so your offer does not have to wait for your sale to close. Our lending partners can walk you through how each product works, what each one costs, and which one fits your situation. The catch is that you may be making payments on more than one loan for a while, and some of these products have to be set up before your home goes on the market, so talk to a lender early.
Selling first and negotiating Seller Possession After Closing. Seller possession after closing means you sell your home and keep living in the home after closing for an agreed period, under a written agreement with the buyer. You get your sale proceeds at closing, you know what you have to spend, and you can write an offer on your next home as a buyer with the money in hand. The catch is that the buyer of your home has to agree to seller possession after closing, and how long you can stay depends on what that buyer and their lender will allow. If your new home is not ready when the seller possession period ends, you need somewhere to go, so settle that plan before you sign.
Selling first and using short-term or temporary housing. Some clients sell, close, and move into a short-term rental or stay with relatives while they shop for the next home. You are buying with the money from your sale, which makes your offer easier for a seller to say yes to. The price is two moves instead of one, plus storage and the rent or hotel in between, and that adds up in both money and patience.
Guaranteed offer and buy-before-you-sell programs. Some companies will make an offer on your current home, or front the money for your next purchase before your home sells. These programs can take some of the timing guesswork out of the move. The tradeoff is that the offer on your home may come in below what the open market would bring, and the program may charge fees. We will put the program's terms next to a traditional sale so you can compare the numbers for your own home.
New construction. If the home you want has not been built yet, the build schedule can give you time to sell your current home first, so you are buying with the money from your sale. A builder's contract is different from the standard NC Offer to Purchase and Contract, and the dates for finishing the home and closing come from the builder's schedule, so the timing of your sale has to be planned around those dates. The catch is that your sale may close before the new home is finished, and then you need Seller Possession After Closing or temporary housing to cover the gap. We will map out the dates with you and our lending partners before you sign, so your sale and your new home work together.
The logistics of both transactions
The main issue is timing, because you need the money from your sale to close on your purchase. Closing is the day a sale or purchase becomes final, the money changes hands, and the keys go to the new owner. If your home closes first, the funds are there when you need them. If the purchase would close first, you need a bridge, such as a loan from our lending partners, to cover the gap.
Some clients close on both homes on the same day. A same-day closing is possible, but it leaves little room for delays, because one late wire or lender delay holds up both. Other clients close back to back, with the sale a day or more ahead of the purchase. Back-to-back closings give you more room, and they also mean you need a place to sleep and a plan for the moving truck in between.
The piece we spend the most time on is the two due diligence periods. A due diligence period is a window of days, set in the contract, that starts when the seller accepts your offer. During that window you can inspect the home, ask questions, and walk away from the contract for any reason. You pay the seller a due diligence fee for the right to have that window, and the seller keeps the fee even if you walk away (if you close, the fee is credited toward your purchase price). Your earnest money deposit, or EMD, is a separate amount you put down to show you are serious about the purchase. A neutral party (the escrow agent - usually the closing attorney) holds the deposit, and it is applied to your purchase at closing. If you end the contract during due diligence, you generally get the EMD back, and if you end the contract after due diligence and cannot close, the EMD is generally at risk.
We set up the two due diligence periods so the one on your sale ends before the one on your purchase. By the time your purchase earnest money deposit is at risk, the buyer of your home has finished their inspections and negotiations and is still under contract, so you know the sale is holding. If the sale falls apart before then, you can end the purchase contract inside its due diligence period and protect your EMD while it can still be protected.
This is also why going under contract on the next home before your current home is Active is very risky when you need the sale proceeds to buy. Active is the status that shows your home is listed for sale on the MLS (the Multiple Listing Service, the database agents use to share homes for sale) and open for showings and offers. Until your home is Active, you have no showings, no offers, and no way to know what buyers will pay or how long the sale will take. If you sign a contract on the next home first, you have put a closing date and a deposit on the calendar with nothing behind them.
Then there is the rest of the move: movers scheduled around 2 closings, a place to stay if the dates do not line up, storage if the furniture has to wait, and utilities turned off at one house and on at the other. Each of these pieces is manageable when someone has the dates mapped out ahead of time, and each gets harder when you are sorting them out the week of closing.
What we do to make it a smooth move
A Sell to Move works well when one team handles both transactions with the same calendar in front of them. That is how we approach a Sell to Move at Moving The Triangle Realty.
Before your home goes Active, we prepare the home for the market and sit down with you to discuss pricing, based on what buyers are paying for homes like yours in today's market. We bring in our lending partners early, so you know your numbers for the purchase before you write an offer. We coordinate both closing dates so they line up, and we help with the movers and vendors you need, from cleaners to storage units.
Around those pieces you get everything a normal listing and a normal purchase include: the marketing and showings that bring buyers to your home, the negotiation on both sides, the inspections and repair conversations, and the coordination with lenders, attorneys, and everyone else working toward each closing. We stay on both transactions from the first conversation to the final closing, so you always know what comes next.
If you want to learn more
To see how we run a Sell to Move from start to finish, visit our Sell to Move page. If you want to learn more about how we can help you sell and move forward, contact us today. You can use the contact form on our website or reach us directly, and we will talk through your timing, your options, and what a plan could look like for your home.
Daniel Virag
Moving The Triangle Realty | Keller Williams Raleigh
(919) 272-3217
daniel@movingthetriangle.com
4700 Homewood Court, Suite 223, Raleigh, NC 27609
