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Trying to buy and sell a home at the same time in Denver? We break down the safest strategies, financing options, and mistakes to avoid so you don’t get stuck. If you’re planning a move in the Denver Colorado area, one of the biggest challenges is figuring out how to buy and sell at the same time. In this video, we walk through exactly how to do it and how to choose the right approach based on your situation, risk tolerance, and timeline. We start by explaining why this process is so tricky in the current Denver real estate market 2026. Without a clear plan, it’s easy to end up carrying two mortgages, missing out on your next home, or feeling rushed into a decision. From there, we break down the most common approaches, including the buy before you sell strategy and the sell before you buy approach, along with the pros and cons of each. We also dive into financing options like bridge loans and using a HELOC for buying a home in Colorado, and how to use them without taking on unnecessary risk. Another key piece we cover is how to avoid two mortgages, including strategies like contingent offers, post closing occupancy agreements, and rent back agreements to give you more flexibility. We also explain who this process is the most difficult for, especially if you need equity from your current home to buy the next one or have a tight timeline. At the end of the day, there is no "one size fits all" type answer. This video gives you a clear understanding of your options so you can make a confident decision.
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Hey everybody, how's it going today?
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Welcome to Southern Denver Living. Uh I'm your host Jake Federel and today we are talking about buying and selling a
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home at the same time. Uh this is a situation that we see frequently. Uh most of the people we work with have
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this issue as a matter of fact. Uh and the problem is it is stressful and it is
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money consuming and it is difficult. So today we're going to talk about all our tactics and strategies that we help
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people figure out every day on how to make this as smooth and stressfree as possible with the smallest impact on
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both your wallet and maybe more importantly your emotional state of being. Uh so thanks for joining today.
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We're getting all we've got all kinds of solutions. Stick around to the end.
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We've got some really cool financing solutions that actually aren't maybe as expensive as you would think they are.
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Uh, and they dramatically cut down on the level of stress. So, let's dive into it.
Chapter 2: Core challenges and decision points
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1 minute, 9 seconds
So, you're sitting in this situation.
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1 minute, 11 seconds
All right? You got your 2.75% interest rate and you've been holding on to it for dear life for however many years.
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1 minute, 18 seconds
But things are coming to an head. You need more space. You need a bigger backyard. You need a thirdc car garage.
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1 minute, 24 seconds
Whatever is happening for your world, you need something maybe to be closer to family. And the question is, should you buy first or should you sell first? Now,
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1 minute, 33 seconds
obviously, the problems are, if you sell first, then you need to know where you're going. And the problems there, are you going to stay with family? Uh maybe not most people's favorite option.
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1 minute, 44 seconds
Are you going to stay in medium-term rental? um or are you going to stay in short-term rental even and and what do
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1 minute, 52 seconds
you do? Okay, but if you buy first, the problem is carrying those two mortgages and then worrying about selling your home and figuring out like, well, when
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2 minutes
is it going to sell? How long do we have to carry these two mortgages? Can you even qualify to carry two mortgages and how do we solve that problem? Cuz if you
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can't qualify, then you certainly can't buy the next one without selling the first one. Or can you? We'll get into that later. So to me, this situation is
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2 minutes, 17 seconds
not about money. I mean, it's always about money, right? But it's also about chaos. I have two little girls and a
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2 minutes, 25 seconds
lifetime of stuff and a lifetime of my wife's stuff in our house. And when I think about like, how do we pack all of
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2 minutes, 33 seconds
that up? How do we keep our house show ready? And I see this all the time with my clients, like, hey, we're ready to list your house. How often do you have
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2 minutes, 41 seconds
to clean that thing in order to have it show ready when you have kids and how much notice do you have? So, let's get
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2 minutes, 48 seconds
into it. So, this is a huge problem and in order to discover it, we have to start off with the state of the market today. So, let's go over what's actually
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2 minutes, 56 seconds
happening in the Denver market to figure out how we can best set this up. So, step one in figuring out how to best do
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this process for you is always understanding the current state of the market. Uh, so I'm going to go over today's market. If you're in a different
Chapter 3: Current Denver market conditions
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3 minutes, 12 seconds
market other than the spring of 2026, we can always figure that as well. We've helped people do this in 2021, which was
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3 minutes, 20 seconds
the most competitive, crazy market in Denver in the history of ever. And we've helped people do this in 2025, which is the year that things were really sitting
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3 minutes, 28 seconds
on the market, and folks were hoping and praying to sell their home. And a lot of folks overpriced, and prices came down
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3 minutes, 36 seconds
overall 10%. So, this is possible in any market, no matter which direction of difficulty it is. I happen to think 2026
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3 minutes, 44 seconds
is going to be the optimal time to do this because we're experiencing a sort of neutral market where great houses fly
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3 minutes, 51 seconds
off the shelf if they're perfectly priced and really wellstaged. And if they're not, they might sit on a little longer. And what's great is if you can
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4 minutes
find a gem of a home that's maybe just a tad overpriced that's not going for bidding wars, oftentimes those folks
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will be flexible to do a contingent offer for you. So we'll talk about that in the details of how you know all the
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different ways to do this. But starting off with the state of the market, Denver is in currently, like I said, in a more
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neutral market. So, right now, most houses are selling in about 3 to 4 weeks. So, you list your home, about 3
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4 minutes, 30 seconds
to four weeks later, you have a contract, you accept that contract, and then you're sold in another 30 to 45 days after that. Um, so this is great.
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4 minutes, 41 seconds
This is like calm. It's a really nice time to do this. There's negotiation happening on both sides. Um, and it's
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4 minutes, 48 seconds
it's a really nice time to be buying a home in general, but especially if you're trying to coordinate one of these moves. So, when we're establishing the state of the market, what we want to do
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4 minutes, 57 seconds
is be grounded in reality, okay? And we want to look at your neighborhood comparable listings to understand what's the top, what's the bottom, what's the
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5 minutes, 6 seconds
middle, and you have to come to a place of understanding like, okay, well, what is the minimum I would take and sell my home for in order to make this happen?
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And I always like to be prepared for that number and be grounded in reality of like, well, is that number realistic?
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Because right now a lot of folks are still kind of adjusting themselves to this new market that isn't 2021 and we
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got used to the prices that things were selling for in 2021. And now we're we're letting taking the time to let our expectations adjust. So being grounded
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in reality and understanding, okay, what's the lowest number I would take?
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Is that realistic right now? maybe adjusting your uh expectations a little bit because the good news is if you're
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5 minutes, 51 seconds
you're buying and selling into the same market, which means if you're going to give a little more on the sale of your home, you're probably going to get a
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little more on the purchase of your home. If you wait for a hotter market, it might you might sell your home for more, but you might also buy for more.
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So, if you're downsizing, maybe that's a good thing. If you're waiting for that hotter market, your home is appreciating in value. And if you're buying a
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smaller, cheaper home, then you're going to your home is going to appreciate greater than the home you're buying into. Now, if you're moving up, that's
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6 minutes, 25 seconds
the opposite scale, right? So, if you're moving up, it's kind of better to be in a neutral or declining market because you're going to sell your home that is
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it is growing uh you know, it's it's maybe sitting the same or it's growing less fast than what you're buying into.
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6 minutes, 40 seconds
Okay, so things are growing. You know, 5% a year of a million is more dollars than 5% of $750,000.
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6 minutes, 50 seconds
So, let's go over strategy number one. What I call the leap of faith option.
Chapter 4: Sell first strategy and risks
6:56
6 minutes, 56 seconds
This is you're selling first and then you're buying. So, we have your market, we have your house market ready, it's
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7 minutes, 3 seconds
staged, it's ready to go, the pictures are on, and we sell it, right? Uh, and so once we get under contract, what what
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7 minutes, 11 seconds
I like to do with folks on this is before we list your home for sale, okay?
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7 minutes, 15 seconds
So, as a seller, once a buyer puts a contract on your home and you accept it, you are locked in and beholden to sell
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7 minutes, 22 seconds
that home to them. You don't really have an out. You can be uh uncooperative with the buyers and say you won't fix anything on inspection and hope they're
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going to go away. you can do a couple things to kind of just, you know, get in their way and and hope that they don't buy your house. But if they want to buy
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7 minutes, 39 seconds
that house, they can sue you and force you to do it. So, I always like to take folks out before we list the home while we're getting ready and do a sort of
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7 minutes, 47 seconds
market preview. Okay, let's get out and and prove does what you want exist and does it exist for the price that works
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7 minutes, 56 seconds
for you? And if the answer is yes, boom, we list the house. Okay, so we list that house, we accept the offer, and then
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we're ready. We kind of know what's out in the market, and then uh once that buyer gets through their inspection and due diligence period, this is the period
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8 minutes, 12 seconds
where most of the time if a contract is going to fail, it happens in the inspection time. Most folks, you know, we do a really great job of vetting the
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8 minutes, 21 seconds
buyers who make offers on our listings to make sure, okay, what's their down payment? Are they one car accident away
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8 minutes, 28 seconds
from defaulting on this loan? You know, how certain are we that this is going to work? And so once we feel really certain that the loan is probably going to go
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8 minutes, 36 seconds
through, then we get through that initial inspection period and we get shopping immediately. Uh, a couple things we can do to to help this process
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along. One of them is simply drawing out a slightly longer contract, negotiating an early on loan termination so that we
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8 minutes, 53 seconds
get rid of all of our loans. Because what we want to do if in in this case we're maybe making a contingent offer
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9 minutes
which means the offer for the next home you're buying is contingent upon the sale of your home. So if your home
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9 minutes, 8 seconds
doesn't sell then you don't have to buy the next one, which is great. You're fully protected. The biggest risk is maybe you waste some inspection money.
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9 minutes, 18 seconds
Um, often times with a contingent sale, you'll see that the seller who is selling to you is willing to extend some
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9 minutes, 25 seconds
deadlines if some things get delayed or messed up on your sale. So, that's always very possible. Um, so we can do a
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9 minutes, 34 seconds
longer close, a longer contract to close, which gives us more time to shop.
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9 minutes, 39 seconds
And another thing we do is called a post-closing occupancy agreement. So, this is where we have this built-in
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9 minutes, 46 seconds
shortterm lease for you to rent your own home back from the new buyers after closing. Uh, we can do this typically
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9 minutes, 54 seconds
for up to 60 days. If it's a cash buyer who bought your home, you can negotiate longer, but uh, typically if they're
10:02
10 minutes, 2 seconds
using a loan, the lender requires them to take possession of the property within 60 days. So, if we have that
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60-day post-closing occupancy agreement, that gives you probably in the neighborhood of we got about a week to 10 days of your contract for their
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10 minutes, 18 seconds
inspection period. And then we've got another 3 weeks of that contract to close and we've got another 60 days. So,
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we're looking somewhere in the neighborhood of 70 days to find your home and close on it so that you're not
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10 minutes, 33 seconds
homeless. this is very possible. Um especially if we've already done that upfront work and proven that what you want exists. So this is a great option.
10:43
10 minutes, 43 seconds
It's the lowest cost option. Um and you know cuz you're not spending money on a bridge loan or something like that. Uh
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10 minutes, 50 seconds
but it is risky and sometimes what I see from my folks who do this is they they start feeling the pressure if we start
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pushing things along. if we end up in a market that everything they want is is being bid up. You know, sometimes you're pushed to compromise on the next home.
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And most a lot of work we do with our buyers is helping them to try and not compromise on that next home because
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compromising on the next home is is the biggest costly thing in my opinion that you can do in this process. If you compromise on your next home, you know,
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it limits how I mean, first of all, you're just you're not going to enjoy the home as much as you want to. And then second of all, if you don't enjoy the home for long enough, then you end
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up moving again, which then you end up selling your home again, which costs money. And then you end up buying, which costs loan closing costs and title costs
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11 minutes, 45 seconds
and real estate agent fees and moving costs. So, this is uh if we've proven what you want and it is in abundance,
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11 minutes, 53 seconds
this is still a really good option. If we're questionable on the abundance of what you want and we're kind of hoping for more inventory to show up, then it's
12:01
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risky. Next, we need to understand the flow of the year. And this is different in every market. So, here's what's happening in Denver. Uh if you're
Chapter 5: Market timing and seasonal trends
12:10
12 minutes, 10 seconds
selling from out of town, you want to speak with your agent there. If you need one, we can connect you with somebody really great. Let us know. Um, but in Denver, the flow of the market is this.
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12 minutes, 19 seconds
Everybody thinks on January 1st, or they've been thinking, you know, since November, new year, new me, new house,
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12 minutes, 26 seconds
let's make this happen. So, if you're ready to shop, if you're a buyer on January 1st, you, you know, maybe January 3rd, you call up your real
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12 minutes, 34 seconds
estate agent, you call up your lender, and you start making the preparations, figure out what's approve, what you're preapproved for, and you start shopping.
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And so you could be shopping, you know, by January 7th if that's when you started this process. You be this can all happen very quickly. And so you
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12 minutes, 50 seconds
start shopping. So the highest amount of buyer demand is February, March, and April because for those folks who
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12 minutes, 59 seconds
started in January, the first month is figuring out what's out there, understanding what actually works for them. Uh you know, understanding the
13:06
13 minutes, 6 seconds
neighborhoods better once they're they're in cars and seeing houses. And then as they start understanding better, they're more and more willing to make
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13 minutes, 14 seconds
offers. So by the time you're making your offer in February, so is everyone else. And so February, March, March is
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13 minutes, 21 seconds
the peak of insanity because during February, everyone's making their bids and they're getting beat up. And so
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13 minutes, 28 seconds
we're we're bidding higher and higher and higher and and by March, we're at the peak of insanity if we're in a hot spring season, which we are right now.
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13 minutes, 37 seconds
Um, and so then April is still pretty hot. It's it it starts dying. The enthusiasm dies down a little. I think people get buyers fatigue and offer
13:46
13 minutes, 46 seconds
fatigue. Um, and then in May, I don't know exactly why, but it right around the time kids graduate from college,
13:56
13 minutes, 56 seconds
everything starts slowing down a little bit in buyer activity. People are maybe frustrated and and they're getting ready for summer vacations. And even if they
14:05
14 minutes, 5 seconds
don't have kids, they there may be kids in their family. But for whatever reason, buyer activity starts to slow down a little bit in May. And I know
14:14
14 minutes, 14 seconds
this every year because whenever when I'm acting as a buyer's agent, uh I'm I'm going and showing all these houses
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14 minutes, 21 seconds
in January through April. You know, whatever houses I'll show, maybe I'll show like 15 20 houses on a Saturday, and nobody calls me or sends me text
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14 minutes, 29 seconds
messages to ask what we thought of their listing. Okay. And as soon as May hits, I show those 15 to 20 houses, I'm
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14 minutes, 38 seconds
getting 10 to 15 calls for people like, "What did you think of our listing? What did you think of our listing?" Because for the first few months, they had
14:46
14 minutes, 46 seconds
offers. They didn't care what I thought of their listing. They already had an offer. Come May, people are wondering like, "What's happening? There's this weird thing happening in the market,
14:54
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like everything just slowed down. My listing last month flew off the market.
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14 minutes, 57 seconds
This month, I got to get all this feedback." Uh and and so that's that's what happens every year. Uh and then
15:05
15 minutes, 5 seconds
June and July, we also see uh the most the highest number of uh rental leases
15:12
15 minutes, 12 seconds
signed in the summertime. So we're also starting to get to that point where folks are like, well, it didn't work
15:19
15 minutes, 19 seconds
this year. We got to sign a lease. We got to we got to, you know, do that whole thing and kind of give up for this year. We're going to try next year. So
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15 minutes, 26 seconds
that happens to a lot of people. June, July, and August, we see a lot of those leases being signed. Buyer activity is still strong. So, you know, if you're
15:35
15 minutes, 35 seconds
selling and it has to be in the summer, you're not missing the market. It's just not going to be as crazy it was in the spring. But buyer activity levels off
15:43
15 minutes, 43 seconds
and then as we get closer to the school year, things start slowing down more.
15:48
15 minutes, 48 seconds
Once the school year starts up, like I said, even if you don't have kids, maybe you're a teacher or things are getting
15:54
15 minutes, 54 seconds
cooler and darker and just the energy is starts dissipating. Uh so as we move
16:01
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into the fall, buyer activity slows and slows and it's going to gradually slow down until the end of the year. um where
16:08
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is the lowest in the uh in the holiday season because obviously like most folks you your kids are in school, you're
16:16
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planted, you don't want to disrupt things in that way. You're celebrating the holidays, you're traveling. Um, so buyer have to there's there's a little
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16 minutes, 24 seconds
actually a tiny spike right before Thanksgiving because some folks who are
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16 minutes, 32 seconds
uh shopping in November, they're thinking like, well, we could be in before Christmas and if they're willing to, you know, if they're willing to to shop during the holidays, they're very
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16 minutes, 40 seconds
motivated. So there's there are worse times a year to sell, I think, than November 1st because there's just anyone
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16 minutes, 47 seconds
who's shopping is maybe a crazy person or they're just they're I they're highly motivated buyers often at this time of
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16 minutes, 54 seconds
year. So we have this little spike and then once Thanksgiving happens, it's just a steady trail downward until we get back to January. Now the flow of the
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17 minutes, 2 seconds
market for sellers is different. Okay, but they have the same thought process.
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17 minutes, 6 seconds
January 1, new year, new me house, new me, new house. let's do this. Uh, and so they call their contractor and they
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17 minutes, 15 seconds
start figuring out repairs and getting things painted and maybe updating those old bathrooms that they wish they had updated when they first moved in, but
17:24
17 minutes, 24 seconds
they never did. And so these folks uh do repairs on their homes for the next
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17 minutes, 30 seconds
couple months. So inventory-wise, uh, January is an awful month of inventory. February is an awful month of
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17 minutes, 39 seconds
inventory. March is starting to get better, but it's still very competitive because all the buyer activity. April,
17:47
17 minutes, 47 seconds
it's getting better. May it starts getting really good. And this is it's so funny because it's I you can look at the chart. I I'll show you the chart here.
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17 minutes, 56 seconds
Uh these these two lines just totally separate at this time. Buyer activity starts waning and seller activity
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18 minutes, 5 seconds
skyrockets. And so is in if you think about this, right? Like once you get towards the summer, if you're a buyer,
18:14
18 minutes, 14 seconds
you can't go on vacation and shop. You have to kind of be here for that. If you're a seller, it's a great time to go
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18 minutes, 22 seconds
on vacation and list your home for sale because you don't want to be there to clean it up every time someone schedules a listing. So, uh, and then just folks, everyone wants to move in the summer.
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18 minutes, 33 seconds
It's it's a nice time for the moving process. So, uh we have our greatest listing activity, highest months of
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18 minutes, 40 seconds
inventory, May, June, July, August, and September. They're probably peaking in August because anyone you have this kind
18:49
18 minutes, 49 seconds
of building of inventory and as things don't sell and new new homes keep coming on the market, it just grows and grows and grows, peaking July or August. Some
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18 minutes, 58 seconds
years it's September. Um, and then slowly we see the waning of the inventory as it drops off steadily until
19:06
19 minutes, 6 seconds
the end of the year. And a lot of folks are pulling it off and thinking once we get to the holidays, we got to have our house ready to celebrate. We're going to
19:14
19 minutes, 14 seconds
give up and we're going to try again next spring. As you think about when this is right for you, my first recommendation is give us a call and we
19:23
19 minutes, 23 seconds
can discuss the the the idea of timing the market and and what's going to work best because there's not a
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19 minutes, 30 seconds
one-sizefits-all situation. Sometimes timing the market is possible and very good. And sometimes timing your life is
19:38
19 minutes, 38 seconds
just more important. You know, it's again that like, well, we could sell for more in March, but it's awful for our life and we don't do that. And and my
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19 minutes, 46 seconds
personal opinion is in this whole process, if you're investing in real estate, you're going to do well over time. So, calm it down and do what's
19:56
19 minutes, 56 seconds
best for your life. Because if you're putting yourself in a high stress situation, you know, let's let's not forget moving is they the they say one
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of the top five most stressful things people do on a semi-regular basis up there with losing a parent or getting
20:12
20 minutes, 12 seconds
divorced. And so, um, I I never want to underestimate that this is a stressful process and you want to be as grounded
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20 minutes, 19 seconds
as possible. And if being grounded means you're selling in June instead of March, that's okay cuz guess what? You're going
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20 minutes, 27 seconds
to be buying in July or, you know, maybe you're buying just before that, depending on how you do things. Okay, now let's dive into the buy before you
Chapter 6: Buy before you sell and financing options
20:36
20 minutes, 36 seconds
sell options. Before we get into any of the cool nifty ideas that we have about how to do this really well, my first
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piece of advice is go out and pull a home equity line of credit on your home or a heliloc. Uh what this is is uh
20:52
20 minutes, 52 seconds
usually a credit union will loan you money against the equity of your home if you're not familiar with that. And you can typically get somewhere in the
21:01
21 minutes, 1 second
neighborhood of up to 85 to 90% of the equity you have in your home. So, just
21:08
21 minutes, 8 seconds
to make this easy, if you own a house that is valued at a million and you owe
21:15
21 minutes, 15 seconds
$600,000 on it, you could take up to a $300,000 loan on against the equity. You have
21:24
21 minutes, 24 seconds
$400,000 of equity. You can take $300,000 out on that loan and you can use that
21:31
21 minutes, 31 seconds
for a lot of things like a down payment on the next home. Now, the important thing to understand here is the reason I'm telling you first thing this is what
21:39
21 minutes, 39 seconds
you should do is because once you apply for a loan for a new home loan through a lender that is marked on your credit
21:47
21 minutes, 47 seconds
report. And if you go in and apply for a home equity line of credit with a credit union, they're going to see that marked on your credit report and they're going to say, "Oh, you're shopping for houses.
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21 minutes, 57 seconds
You're probably using this for a bridge loan." Now, there's nothing illegal about doing that, but it's not worth it
22:04
22 minutes, 4 seconds
for a credit union to give you this very short-term home equity line of credit because they're not going to make any money off of it because you're the time
22:12
22 minutes, 12 seconds
you you borrow the money is so short, it's just not worth it for their time.
22:17
22 minutes, 17 seconds
So, if they see that on your credit report, they will deny you for a home equity line of credit. The good news is it doesn't cost anything for you to pull
22:25
22 minutes, 25 seconds
out a home equity line of credit. um it might cost you. A lot of times they'll do what's called a desktop appraisal.
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22 minutes, 31 seconds
They do a sort of Zillow automated value estimation of your home and they'll say, "Okay, yeah, it's worth about a million.
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22 minutes, 38 seconds
We'll give you $300,000 on this." So, you need to do this first before you start exploring that because whatever
22:45
22 minutes, 45 seconds
you do, if this this home equity line of credit could be exceptionally useful for what's happening next and if you don't use it, it just didn't cost you anything
22:53
22 minutes, 53 seconds
but a few minutes of your time. And if they had to do a full-on appraisal, uh, you know, that's going to cost you 600 bucks. In the grand scheme of things, it
23:01
23 minutes, 1 second
might be worth it to blow the 600 bucks to leave these possibilities open if you think this is going to be a possibility for you. Um, and sometimes, you know, let's say you don't need $300,000.
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23 minutes, 14 seconds
Uh, they could do that. You can request just a desktop appraisal, which they'll have less confidence in. So, they might loan you less money. So maybe they're only loaning you $250,000.
23:26
23 minutes, 26 seconds
But if $250,000 will get you to the next home, then great. We can figure that out later. Okay. Now that we've talked about helocks, let's talk about using that
23:35
23 minutes, 35 seconds
heliloc as essentially your own bridge loan. Of the financing options we're going to discuss today, this is probably
23:42
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the most affordable uh and and least complicated. So self- financing through HELOC and you have your HELOC pulled,
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what you're going to have to be able to do is once you pull that HELOC, then you can run your credit with a lender and understand, can you afford to and you
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look at your own finances, of course, can you afford and can you qualify to carry both mortgages at once while you're buying the next home? So, you've
24:08
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got that $250,000, $300, $300,000 or whatever, and you're going to go ahead and buy the home first. So, you make
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your offer and and what you want to do in this situation, we want to be fully ready as as ready as we possibly can to
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list your home for sale. So, this is kind of the opposite of what we're doing with the the sell before you buy. Uh, in the buy before you sell, we want to have
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your home as ready as possible. if we could get it into show ready condition to take photograph to take photos, then
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we do that and you go make your offer on your next home. And as soon as you're through your own inspection period and you feel confident about both the
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quality of the home and your own loan situation, we can list your house as early as then. And sometimes if we sell
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it fast enough and we maybe gave ourselves a generous uh timed contract for the next purchase, well then
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sometimes maybe we can actually time it up so you don't have to even use the heliloc and we can close on the sale of your home and the buyer of your home
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pretty quickly. Um but let's say you know we're in this average market of 3 to 4 weeks. It takes three to four weeks
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to get a contract on your home. You want to be ready to use that helock. So, use the heliloc and and even if you aren't
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ready to list your home as soon as we're through the inspection period, we can also just list your home as soon as you're out. So, you move out, we get it
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cleaned up, you're you you've got this heliloc that you're now so you're paying two mortgages. Um the good news is on
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your your purchase of your home, you you do get the first month off for your purchase. So, let's say you purchase
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your home on April 1st. you don't owe a mortgage until May 1st. And we actually also have ways to delay that even one
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more month. So it could be as late as June 1st to give you some time where you're only covering that one mortgage
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and payments from the HELOC. Now, let's dive into a real world scenario of what it costs to have that home equity line of credit. So today's interest rates,
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I'm going to estimate you're probably going to be somewhere in the neighborhood of 8 to 8 12% interest on that heliloc. We're going to call it 8
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and a half. Um sometimes like a canvas credit union might give you an introductory rate to the money that you
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pull. So the first time you pull out, so when you open a heliloc, there's basically just this big pile of money
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and then it looks like you know one of your accounts. So you have your checking account, your savings account, and your heliloc account. Okay? And that'll be open for whatever amount you take out of it. And then you can pull money from it.
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A lot of times you get an introductory rate for the first year on the first pull you do. So let's say you pull that
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money out and that first year it might be as low as 4.99%. And then it's going to jump up to 8 and 8 8 to 8 1/2. So,
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that's a really great situation cuz 4 and 4.99% on, you know, a couple hundred,000 loans isn't too bad,
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especially if you're going to pay it back in, you know, 2 3 4 months. But, uh, let's assume the worst and you can't find an introductory rate, 8 12%. If you
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pull for every $100,000 you pull, it's going to cost you just over $700 per
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month uh to to pay that back. So, your holding costs, if you for every $100,000, let's say you you let's say it
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takes three months to figure this all out. You know, maybe you take a month to get under contract and then you have a buyer who's a little slow. Um, so 3
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months for $100,000 is going to be right in the neighborhood of $2,200 for 3 months. Uh, it's let's say, you know,
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obviously if it's you double that and it's $200,000, it's going to be right around 4,400 a month. In the grand scheme of things, this self-funding
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option is pretty good. And if I could pay something in the neighborhood of five grand to lower the stress of my
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family's move, I absolutely would. Okay, let's say you already applied for your mortgage and you can't self-fund with this HELOC and you have to take a traditional bridge loan from a bank.
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Couple things here. your interest rate is going to be a little higher. So, let's call it 9 and a half% and there's going to be an origination fee of
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something like 1 to 2%. So, if you take out $100,000, you know, that's call it
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$1,500 in an origination fee and then it's going to cost you a little more on your monthly payment. So, instead of just over $700, you're just under $900.
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Not a huge difference except for the origination fee. So, if you're going for, you know, three months on this, uh,
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for every $100,000, you're looking at $2,400ish for the interest payments plus that
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extra $1,000, maybe $2,000 on the origination fee. So, they make this offer on your home, so it doesn't count against your DTI. It is a binding offer.
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The intention is just to take this off of your, you know, off of your credit score or off your credit report so you
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can buy this next house. It is a binding offer. So, the the kicker is they typically give you an offer that's something like 70%
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of what they think your home is actually worth. U and they don't intend to buy it. They don't want to buy it. They don't want to deal with that. That's a whole mess for them that they don't want
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to get into. But they know if you can't sell it that they can actually buy it from you and they'll come out okay. So,
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the intention is you buy your next home, we get ready and sell your next home, and we're certainly going to sell it for more than the 70% of the value that they
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offered you. So, this is that situation where we just need to be really grounded in reality about the value of the home
30:00
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that you're selling. Um, and you have that worst case scenario. You you could sell it to them. You certainly don't want to cuz we're going to get you a lot
30:07
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more money if we go to the market, sell it on the MLS. Um, but that's a really clean solution because you don't have a
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contingency to make because you don't have to sell this home anymore in order to qualify for the next one. The next oper uh option from Cal is called the
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tradein mortgage. It's just the same situation before, but you don't have your down payment for the next home. So,
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they're still making the offer on your first home and then they're advancing you uh for some of your equity from your
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first home in order to put the down payment on the next home. And that is actually an interestfree loan, they're
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going to recoup it in some costs for carrying that loan. So, if you were buying an $800,000 house, you know, it's
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it's a there's origin there's like carrying fees involved and they charge you like per $500,000 and it scales up.
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If you're buying $800,000 houses, this is probably somewhere in the neighborhood of between 12 and $20,000
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of cost to you. So, this is a more expensive option than the heliloc or the bridge option, but it solves a big
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problem if you can't qualify for both loans. Another financing option worthy of note is Fly Homes. This is a simpler
Chapter 7: Bridge loans, HELOCs, and costs
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one, less to explain here. They have two models. The cash offer model, which actually solves a couple of problems. If you're in a really competitive market,
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uh they turn you into a cash buyer. So, what that looks like is they buy the house in cash and then they finance the
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loan to you afterwards. So, you can be a cash buyer for the sake of your purchase, which means you look like a a super convenient, really strong offer in
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whatever market you're in. Sometimes you can negotiate some money off the price of the home if you're a cash offer because the convenience you're offering.
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Um, they do charge something like a 9.99% interest rate on whatever they're loaning you. So that's about $833
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per h 100,000. So you can do the math on that. If it's a million purchase, that's going to be $8,000 a month, which is
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pretty big. Um the hope is that you're refinancing that really quickly. Uh so depending on if you had to sell your
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home or if you could qualify for both, then you could you could typically do that very quickly and the refinance process will be started and moving along
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before you even close the home. So, you're probably not looking at too many months of that huge down payment. Uh, so that's another option that solves a
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different problem maybe, but also this this same problem of moving and buying at the same time. Uh, there's also the instant equity model, which just a
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basically another version of a bridge loan, but that's from Fly Homes. Another option that I kind of glazed over in the beginning is the contingency offer. As I
Chapter 8: Advanced strategies and cash programs
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said, this is a pretty neutral market where contingency offers are going to be accepted more often. This is going to
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work more often. You might have spoken to somebody and said, "Oh, contingencies just don't work." That's in 2021, a contingency did not work. If someone
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came to with a contingency, I'd say, "Hey, we need to explore these other these other possibilities cuz this is going to be a tough one." In today's market, a contingency could be possible, but again, we just need to be prepared.
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Okay? So, if you're making that contingency offer, we want to know what's the range that we can expect to collect from the sale of your home. How
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long is it going to take? And we need to be completely ready with the marketing upfront. So, we can do a great job of showing. So, if you're making that
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contingency offer, basically, you need to show the seller of your new home, we're so ready. We're so organized.
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We're making this contingency offer. And maybe your house doesn't even necessarily have to be on the market yet. It's helpful if it is, but if it
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isn't, we have the marketing package complete. We can show them the photos of your beautifully staged home. We can show them our pricing structure because
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they're they're doing us a favor by accepting a contingent offer, right? And maybe we're doing them a favor also by buying the house, but they're going to
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have less trust for us because they're contingency, because you're a contingency. So, if we can show them, here's how ready we are, and here's what
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we're going to do to make sure that we close on the purchase of your home, we're ready to rock and roll. That's the most important thing to be ready in a
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contingency. Because if you show up and you say, "Yeah, we're making this contingency offer. We're going to be on the market eventually, but we're not ready yet." Then they're probably not
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going to accept your offer. They're going to wait for something that's a little more certain. So, contingencies are very possible in this market. We've
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done them. we've succeeded in them and we've avoided some of these higher costs to these loan programs for folks. So,
Chapter 9: Final recommendations and next steps
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buying and selling at the same time complicated, but we have a few options.
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Just to review, we had the leap of faith option where you're maybe making a contingency offer or you're just not sure where you're going to move next.
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It's the lowest cost option, but can often feel really stressful. There's also what I call the Airbnb pro, the
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Airbnb option, which is basically the first option. Understanding that you are going to take the option to live in a
35:26
35 minutes, 26 seconds
short-term Airbnb if you don't find what you want. I think that's a really great backup plan that keeps you maybe the pressure is still going to be on, but at
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least if you know you're not going to be homeless, the pressure is a little less knowing like, hey, we're just we're ready to live in a short-term Airbnb for
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a little bit if we have to. And then there's the loan solutions where we finance all the problems away. It costs
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a little money, but it man it really, you know, we've guided people through this last year and I just watching how
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much calm it brought to the to the family in in this big transition.
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Anyway, it's pretty amazing. So, one of those options and sometimes we combine several options, right? Sometimes we combine the heliloc option with some of
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the other financing programs. So, um, and then finally, the maybe you get lucky contingency plan, which this year
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is a good year to get lucky. Uh, so all that said, all it really takes to understand your best options is a conversation. We'd love to connect.
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36 minutes, 28 seconds
Thanks so much for joining today.
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36 minutes, 30 seconds
Whether you're moving in 9 days or 900 days, we would love to get on a strategy call with you and help you figure out the best neighborhood, the best loan
36:38
36 minutes, 38 seconds
solution, the best what, you know, the best whole package situation. My sister Megan and I have been professional real estate agents for a combined 20 years in the Denver area. We're Denver natives.
36:49
36 minutes, 49 seconds
We live here. We love it. And we would love to help you figure this out. Thanks so much for joining. We'll see you next time.
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