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Old 03-01-2017, 10:13 AM   #1
Jimmy Stang
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My wife is musing about upgrading our home, but I'm not fully convinced. One of the big turn-offs for us is having to sell first, and then buy. I know that is "how it is done", but being pressured into buying something (or using storage, renting, etc. in the interim) is not appealing.

Enter "bridging financing". My mortgage person has said that we can carry a combined mortgage for both houses, and then we can decide whether to sell or keep as a revenue property. More than likely, the plan would be to buy, move, prepare the now-vacant house for sale for a few weeks, and then sell.

The obvious risk is a housing market crash, or even if things sag a little. This would not only reduce the sale price, but also the rental market if we decided to keep it for revenue. While these things are difficult to predict, my uneducated sense is that things are on the uptick again. Would you tend to agree?

As a realtor, are there any other considerations to talk me out of bridging financing? Is a vacant house easier or more difficult to sell? Is staging really that necessary?

I have only ever lived in two places - my parents' place until 22, and then in my current home for 15 years. And that purchase was with a builder. So I'm admittedly a bit lost when it comes to the pre-owned market, processes, etc. Thanks in advance!
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Old 03-01-2017, 10:28 AM   #2
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Enter "bridging financing". My mortgage person has said that we can carry a combined mortgage for both houses, and then we can decide whether to sell or keep as a revenue property. More than likely, the plan would be to buy, move, prepare the now-vacant house for sale for a few weeks, and then sell.
Hi Jimmy -

Great questions and I am sure Realtor 1 will comment on the market, etc.

But for the financing part, just wanted to add some comments. Bridge financing comes into play when you have sold your existing home and want to "bridge" the equity (cash) from the sold home as down payment on the new home.

It sounds from above that you are going to carry both properties and decide what to do with the current home. The question is your down payment for the purchase... you are either refinancing your existing to get some equity out for down payment or you currently have some available funds for the down payment for the purchase?

Just wanted to be sure you understood that "Bridge Financing" is for when your current home is in a firm binding contract (sold) and you are taking possession of your new home before your existing is closed (where the buyers have taken possession).

Best wishes in your new home search. Feel free to PM if you have more questions... I know you are working with someone but am available for 2nd opinion or questions.
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Old 03-01-2017, 11:15 AM   #3
Jimmy Stang
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Hi Jimmy -

Great questions and I am sure Realtor 1 will comment on the market, etc.

But for the financing part, just wanted to add some comments. Bridge financing comes into play when you have sold your existing home and want to "bridge" the equity (cash) from the sold home as down payment on the new home.

It sounds from above that you are going to carry both properties and decide what to do with the current home. The question is your down payment for the purchase... you are either refinancing your existing to get some equity out for down payment or you currently have some available funds for the down payment for the purchase?

Just wanted to be sure you understood that "Bridge Financing" is for when your current home is in a firm binding contract (sold) and you are taking possession of your new home before your existing is closed (where the buyers have taken possession).

Best wishes in your new home search. Feel free to PM if you have more questions... I know you are working with someone but am available for 2nd opinion or questions.
Thanks for the reply. I knew that this was kind of a half real estate, half mortgage type of thing, so I'm glad that you also saw it.

Perhaps I've got my terminology mixed up. When I spoke with the mortgage guy on the phone he called it this (I'm pretty sure), but maybe only because I was.

Basically what we'd like to do is use our equity in our existing home (approx 2/3 paid off) to qualify for a "new" mortgage to cover both homes temporarily. And then when we sell the old home, we can dump as much as permitted onto that mortgage to get it back down to normal. Of course, there are limits as to how much you can put as a lump sum, in additional to doubling up payments.

I was told that, given our incomes and debt level, we'd qualify for that bigger mortgage. There was no talk about having to sell first (in fact, that was the exact thing that I told him we did not want to do), so perhaps I was mistaken to call it "bridging". Now that I type this out, it sounds more like we're just getting a much larger mortgage by leveraging our equity.

So from a mortgage person's point of view, is this asinine? A real turnoff is selling while living in the home, and then scrambling to find a place before we need to move out of the old place. I know that possession dates are flexible and negotiable, but it still seems like too much uncertainty for my liking.

To bring it back to real estate a little bit, we are also really picky as to what we'd like, and to the area that we are interested in. So the criteria that must be met is quite specific, otherwise we'll just stay put.

Which brings me back to "buy first, sell second". I'd rather not live in a constant state of "ready to sell" for when my wife finds that perfect place for sale. I'd like to pounce, move, and then sort the old one out afterwards. I know that's ass backwards compared to how most people do it!
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Old 03-01-2017, 11:19 AM   #4
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Jimmy - thanks for the reply. I will PM you as from here the info / questions get personal.
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Old 03-01-2017, 03:36 PM   #5
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So I just did this about a year ago. We have three small kids so there was no way i was putting the family through showings and such trying to sell the house. Our bank worked with us to finance two properties by calculating the expected rental income on one of them, which basically gave us options to do what we wanted with the other house. The old house took almost a year to sell in a tough market, but the minute i staged it we had it sold in two weeks.

I would 100% stage a vacant house, every single time. It was incredible how great the home looked once staged, and traffic jumped considerably. Buyers just cannot visualise a home without furniture.
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Old 03-02-2017, 06:25 PM   #6
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We did something similar, but found our house and then made our offer conditional on the sale of our gold house. For some reason, realtors seem to not like to do this, but it went very smoothly in our situation. It also helped that the house we were selling was in a fairly hot market and we understood how to price it correctly. Obviously, it adds some more complications to the whole process, but it did work for us. We were prepared to carry both mortgages if the sellers of the house we bought balked at the condition though.

One other thing I would really recommend is finding the house you want first. I have many people I know that have sold first and then ended up settling for something that was good enough.

And lastly, staging makes a huge difference especially depending on the size of your house. I was amazed how big and open the staging made our old house feel. Just for comparison sake, a family member and I sold houses on the exact same street one month apart. The properties were essentially identical. We used a stager, spent one full day and about $200 preparing for the sale. They spent over a month and over $5K preparing for their sale and did not use a stager. Ours sold in 5 days and theirs took almost a month to sell.
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Old 03-02-2017, 07:15 PM   #7
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To chime in on all the informative posts above,

- staging is a great option and if it were free I would suggest everyone do it. With that said, it is costly and each house is unique in how I go about marketing the property. If your property is a fairly common property in a area where homes are moving, I would see no point in spending the money on staging. If it is a unique home or something I predict to be a tougher sell, then 100% we need staging. There are multiple levels of staging as well which I take into consideration when preparing my marketing report. There is also virtual staging and I can have the photos look as if the home is staged to attract buyers in the door of a vacant property.

The point about realtors not liking offers conditional to the sale of a home is not completely accurate. Although you can continue to market your home as active if an offer conditional to the sale of the buyers home is accepted, I would need to inform buyers realtors who ask if the home has any offers on it that we do in fact have a offer. This can turn what may have been a new buyer without such condition off of the property as there is no guarantee they will get the home if the love it.

I can prepare a market evaluation and give you my expected timeline to sell under different prices to help make a decision best for your family. This would then allow you to browse the market at your leisure and only act on the perfect home with no pressure on a tight deadline.

As for the market right now, it has been a night and day difference from this time last year. Prices don't seem to be doing much but sales activity shows properties are actually moving whereas this time last year it seemed that nothing would sell. I have been involved in multiple competing offer situations this year which is also a good sign of the market stabilizing. Condos remain the challenge but side by sides or detached homes are moving as if there was never a slow down.

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Old 03-02-2017, 08:52 PM   #8
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Yah, good point, didn't mean to say all realtors don't like the "offer conditional on sale" just from my experience, which you certainly have far more!

Also, the stager we used just used our stuff, so it wasn't "true" staging. We decluttered and then she moved things around to make it look best with what we had. In my opinion it still made a huge difference!
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Old 03-02-2017, 10:41 PM   #9
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We did the same last year. We didn't want to buy unless it was the place we wanted at a price we were happy with.

Travis and the experts would know better than me, but my impression is the extra flexibility was worth a little $ in bargaining on our purchase especially. Maybe not directly or every time, but an offer a little lower than they want might seem better with fewer strings. It doesn't take much on a purchase to cover some carrying costs.

We did the new place as combination fixed and heloc, so when we got the sale proceeds we could put it all on the new mortgage without worry about limits.
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