Anyone buy a house before theirs sold?

[nnkgirl]

Our house has been on the market for all of three days but we already found a house that we really really want!! Has anyone ever done this? And what do you do if you close on the new house before your old place has sold?? :confused:

[hmbay]

we built a house and didn't have our current home sold before the new one was built and the builder was ready to close. We didn't have enough finances to cover both mortgages and no downpayment without selling the current house. To get a mortgage for house #2 we:

1) took out a home equity loan against house 1 for all the equity we could for the downpayment on #2.
2) found renters for house 1 who signed a lease for an amount high enough to cover the mortgage on house 1 and the HEL which satisfied the bank who then loaned us the money for house 2. (FWIW we have excellent credit scores and a history with this bank--all banks might not be this trusting)

Would I recommend this approach--absolutely NOT. When our renters moved out at 1 year we had to put the house back on the market and it was a much slower time then and it took 8 months to sell which put us in some serious financial hardship. In the end it all worked out (other than we're still paying off credit card debt we accrued during those 8 months trying to free up money to pay the mortgages) but it was very stressful and honestly I wouldn't say it was worth it. I love my current house but I don't like what it took to get us here.

[Secret_Squirrel]

If you want to close before the current house has sold, you need to be able to carry the two mortgages, or work out an arrangement similar to hmbay.

You don't want to make a contingent offer?

[nnkgirl]

Nobody in my area accepts contingent offers.......trust me already thought about that one!! :(

[IrishEyes]

Nope. We didn't even start to look until we had a contract on our house. The market in our area had slowed, and we were worried about how long it would take to sell our house (it was 60 days on market before we got a contract).

If you can't carry two mortgages, rent your old house or put down a contingent offer, than perhaps it's better to just wait. Sometimes things aren't meant to be.

[ee_chick]

We did and it worked out fine, but I found it extremely stressful to carry two mortgages. It was only for one month, but in that month we had a fire in the surrounding hills that was bad enough that *both* houses were evacuated. :eek:

[SweetRed]

We did, but this was when the market was just starting its downturn a little over a year ago. We were planning on tearing down our old house and building a modular home when we found our new home. So, we were financially prepared to carry two mortgages for up to a year if need be. Still, I was a wreck for the seven weeks it took to sell our place. We only went for it because we knew our new house was very unique for the area.

Honestly, unless the market in your area is still hot, I wouldn't do it. Either that or you have a stomach of steel.

[snoopy30]

We did it but we are building a new house so we have several months to sell our current one. All the same I do worry about it! Our house is in a relatively "hot" area so it should sell though not as quickly as when we bought it. We are giving ourselves about 3-4 months to sell which I am hoping is enough!

I go back and forth between stressing about NOT selling the house and carrying two mortgages and then selling the house too soon and not having a place to live! :eek:

We are so excited about our new house though and I just have to remind myself it will all work out. Our agent is confident we will sell in time so I'm trying to stick with those positive thoughts!

Good luck!

[snowzilla]

We did it, and I didn't find it stressful at all - however, our market here has gone crazy, and our particular neighborhood (the one we were selling in) was seeing one-day turnovers on new houses entering the market, so we weren't too concerned about the house selling quickly. Once it did, we still had an overlap of possession dates, so we had to apply for bridge financing to carry us through the period of carrying two mortgages, and I think in the end, we only had one month of two mortgage payments.

[ks_piper]

We found our dream house and listed our house the same day we put an offer in on the dream house.

It was a contingent offer - thankfully and luckily for us - we had a contract on our house 4 days after we listed it!

Of course, there are always snags...we dropped the contingency on the house we're purchasing to solidfy our offer. We close on the 30th.

In the meantime, our buyers are having $$ issues. They're expectin unreasonable repairs and updates to the home we're selling and don't have much cash flow. We're trying to finagle a deal that will work with both of us so we can close on both houses the same day, but it might not work out.

Thankfully, we have a potential 2nd buyer in the wings who could close 2 weeks after we close on the house we're purchasing. My folks will be able to float us a quick loan since we were using the proceeds from the sale to pay our closing costs and we'll pay them back when we can.

We're still hoping we can find a solution with buyer #1. Oh how we hope! Our payment on our new house is MUCH larger than our current one.

[Jenyfer9]

We did, but it was 2 years ago when the market was different than it was now. I didn't find the situation all that stressful, but we KNEW that the type of house that we were selling would sell, either as a tear down or as a starter house (and there weren't many on the market in our area at the time!)... and we were right. We worked with a friend who is a mortgage broker and he helped us immensely.

[alisong]

We did, but this was three years ago. We were already planning on listing our previous house, but then our current house turned up and we just had to make an offer. I think we listed our previous house about three weeks after our offer on the new place was accepted, and we had accepted an offer two weeks after that (we didn't accept offers for two weeks, and had a nice little four-way bidding war). We had two mortgages for a month or so, and it all worked out fine.

There was never any doubt our previous house would sell fast, but it was still pretty nerve wracking. I don't think I'd do it with the current market.

[KGif]

Have you looked into a bridge loan?

http://en.wikipedia.org/wiki/Bridge_loan

Example: A consumer is purchasing a new residence and plans to make a down payment with the proceeds from the sale of a currently owned home. The currently owned home will not close until after the close of the new residence. A bridge loan allows the buyer to take equity out of the current home and use it as down payment on the new residence, with the expectation that the current home will close within a short time frame and the bridge loan will be repaid.

Bolding is mine. Not ideal by any means but I'd consider if ONLY if it was deemed to be the best option AND if both I and my realator felt confident that my home would sell in a fairly short period of time.