Should you buy before you sell?

moving day book 1


There’s the short answer. Now for the longer version.

I have a severely handicapped sister who lives at home with my Mom. There was no way we could show the property until Mindy and my Mom were moved to their new home. The new house was purchased all cash prior to the sale of their former home. If we had to do it all over again, it would be done the same way. Buy first…move in…then sell.

But very few people have the money to purchase their new home before selling their current home. Even fewer people do not need to know for sure how much their current home will sell for, before deciding how much to spend on their new home. Getting an appraisal on your current home is not an assurance that you will actually sell your home for that amount. Still, for some people, buying first if they can well afford it, will help them to get top dollar for their current home, especially if they have children, pets, or as in my Mom’s case, a severely handicapped family member.

The most common way that people move to their new home before selling their current home is via a “bridge” loan. I once bought a home that had tons of wallpaper and I wanted to strip the wallpaper before I moved in. I used a bridge loan to close on the new house before I had the money from my then current home. I did not take out the “bridge” loan until my home was in contract and past the inspection phase and all contingencies. I then used a bridge loan for two weeks so I could strip the wallpaper and move in a bit more leisurely. I had three small children at the time and I was moving to a larger home in the same neighborhood. All went well and the bridge loan was paid off when my home closed after we were all moved in to the new home.

The main purpose of this post is to tell you that “bridge loans” are NOT easy to come by these days.

I hear a lot of talk about how much the mortgage industry is “tightening” and how much it is “changing”. The reality is…it is just going back to the way it always was.

Bridge Loans are for people who are in contract on their current home and who want to avoid the hectic moving after closing and within 24 to 48 hours. They are not to lock in a price that has not been tested on the current home. Very few lenders want to take the risk of not being in first position by extending financing based on what you THINK your home will sell for these days.

If your lender told you you could buy before you sell via a “bridge loan”, CHECK AGAIN! They may have changed their mind.

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: cell: 206-910-1000

12 thoughts on “Should you buy before you sell?

  1. Last year, a friend of mine was lookign at obtaining a bridge loan when the perfect place came on the maket, but his old place hadn’t sold.

    The broker told him he didn’t have enough income to qualify for the new mortgage while still paying the one on the old house.

    Getting a bridge loan turned out to be too complicated, so he just stated his income was $40K/yr higher than it actually was, and he qualified for the second loan.

    He’s one of 3 people I know personally that inflated their income to avoid using a bridge loan.

  2. Thanks for the post. This issue has come up a lot in the last several months and we even talk about it at our marketing meetings. Lending is now different and the market is changing all the time. I would suggest to anyone who is thinking of buying a home, sell their home first…unless you have very good reserves that would dictate otherwise. I know of 2 stories of late where people had their home on the market and in escrow and purchased their new home. As they closed on their new home their home they were selling fell out in the last week…so they got the deposit back…not so fast. This is also up in the air and now they can’t get another offer on their home and have proceeded to be out on paper about $60,000.

  3. Good post and good advice, Ardell.

    Some of the early shock-stories on Ben’s housing bubble blog were about people from [Minnesota, Long Island, Illinois, etc] who had bought a place in Florida before their first house had closed. As bad as those situations were in 2005 and 2006, they were in a much friendlier lending environment than people today. A few of these people managed to escape with a small loss or a good scare. Not so today.

    I’m photoblogging the decline and fall here in Seattle. I’d like to nominate EASTLAKE as the first close-in neighborhood to show obvious signs of serious distress.

    Please see for a series of pics about Eastlake.

  4. I’ll try to remember to start tracking Eastlake as part of my Sunday Night Stats. Maybe you could remind me on Sunday night or Monday morning to add the stats to the comment thread so we can track them. I’ve never sold anything in Eastlake, but I have a friend who owns a place there that she rents out. Space needle view I’m pretty sure, have never been there, she’s always come here. She moved up to Blaine and uses her place for short term rental mostly to tourists who want to stay in a real place instead of a hotel.

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