The Spring market has arrived with more listings popping up and pent-up demand creating competing offers for desirable properties. If you’re in the market for a new home and have a property to sell, this is for you.
Tight Housing Inventory Challenge
More buyers, who also have a home to sell, are looking for alternatives when timing the sale of their existing home with closing on a new property. Historically, the buy/sell scenario was solved with a contingency being written into a purchase offer making the sale of the current home a requirement prior to closing on the new property. This protected the buyer from trying to qualify for and carry two house payments.
Referred to as a “contingent offer”, they are now repeatedly taking a backseat to cash and non-contingent buyers on desirable properties.
Time For A New Strategy
If your Real Estate Agent has advised you against making a contingent offer, Equity Advance Solutions can create the bridge in financing you need to access equity and qualify for your new mortgage before selling your current home.
Equity Advance Solutions enable buyers with a property to sell to:
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- remove the debt on an existing mortgage from qualifying ratios
- remove the contingency of the sale on their existing property
- provide a window to update, tidy, and stage before listing
Maximizing Home Value
Time for any necessary repairs, updates, and staging to make your home market-ready can increase the value and shorten the timeframe from listing to sold.
Updates improve curb appeal but vary in their impact on appraised value. Be selective as you invest. The stats below are general guidelines. Work with a local real estate professional who can share insights specific to your specific area. see full report here
Homes that are professionally staged typically sell for 1% to 5% more nationwide. On a $500,000 home, that’s an additional $5,000 to $25,000.
Client Story
A recent client had their eye on a specific neighborhood and school district for a future move. When a fantastic home in that neighborhood came on the market their timeline accelerated catching them not fully prepared to move.
As a family busy with life and activities, they dreaded the challenge of quickly preparing their home for sale and then keeping it “show” ready. Between work schedules, a variety of activities, and a few pets, a “sell ready” daily appearance was unattainable, especially on short notice. Upon discussing an Equity Advance Program known as a Bridge Loan, the relief they shared with a flexible solution answered my question what program to recommend.
A Pre-Approval to purchase using the Bridge Loan got their new home under contract and closed in just over 30 days. The family, their belongings, and pets are settled into the new home and updates are underway to optimize the sale price of their previous home.
What’s Right for You?
Determining what is right for you comes down to equity, timeline, and the type of loan to be used for the new property. Work with a lender who has experience in these products and can share the pros and cons of each path.
There are a variety of programs available ranging from a guaranteed backup offer to remove the contingency of the sale on your current home when making an offer, to a bridge loan, like the client story above, that provides an extended timeline and access to equity for improvements on either property.
Highlights for Three Popular Programs
Bridge Loan
- Qualify for a new home before the sale of existing property -removes the debt on existing mortgage from qualifying ratios
- Fast turn pre-approval
- Requires 25% to 30% equity position
- Flexibility proceeds options – sale proceeds exceeding property lien may be retained by the seller or used toward a principal reduction on the new home loan.
- Re-amortization of new loan with principal reduction when departing residence sells
- Available on conventional and jumbo loans
- Unlimited timeframe to prepare and sell existing property with no penalty
Equity Unlock w/ Advance
- Program provides a firm back-up offer removing contingency
- No monthly payment on equity advance, 0% interest
- Equity funds exceeding down payment requirement may be used to eliminate other debts or make improvements to either property
- Can be under contract at time of application
- Available on conforming loans
- 620+ Credit Score
- No investment properties or second homes
- Limited timeframe on equity advance and time to sell existing property
Contingency Removal Guaranteed Back-up Offer
- Removes debt on departing residence for qualifying
- Serves as a back-up offer allowing contingency to be removed
- Requires the addition of a complimentary product to access equity funds
- No investment properties or second homes
- Capped at $1.2M
- Limited timeframe to sell prior to back-up offer being exercised
My Advice
Home prices just keep creeping up. In Oregon, the median home sales price is up 3.9% year over year. We’ve yet to see any markets endure sustained losses and the Pacific Northwest has remained strong and continues to climb.
The .25% you might save in rate if you wait will be quickly eaten up with month over month home price increases. Rates have steadied but timing and direction for future mortgage rates is a wait and see. Current economic factors don’t support a drop any time soon.
Making an educated first step could save you time, money, and a lot of stress.
