Buying a new home before selling your current one sounds impossible – but what if there’s a smarter way? Watch this video to learn a strategy that could take the pressure out of your move and completely change how you approach buying your next home!
Video Transcript
If you’re planning to move, this simple financing strategy could save you months of stress and may cost you a lot less than you expect. Hi, I’m Diane, the Prescuit pickle lady, and I’m Randall, her trusty sign gig. We make videos to help people who are thinking about relocating to Prescuit understand what it’s really like to live here. If you’ve already decided Prescat is where you want to live and you’re trying to figure out the smartest way to buy your next home, this video is for you. Today, we’re going to explain bridge loans in plain English, show you when they make sense, who should consider one, and why buying before selling can completely change the way you experience your move to Prescuit. Stick around to the end because that’s where we’ll show you why the net cost of a bridge loan is often a lot less than people think. [music] All right. The deadline trap happens a number of different ways. Stress scenario number one is you find the right home first. Now you got to sell the one that you already have, the current one. Yeah. So, a lot of times we have folks come in Yeah. to visit. They uh say, “I’m not ready. I’m not ready. I’m not ready. But I still just want to see what’s houses are like here. Sure. They fall in love and they’re like, “Oh my god, I don’t want to miss this house. This is the one. This is the one.” So, what can I do? But my house isn’t on the market. Yes, you could do a contingency. If they take your contingency, you’re going to pay list price. And now you got get to sell your current home as fast as you possibly can. A lot of stress. A lot of stress. You lose a lot of negotiating. Yeah. Uh power on that. And uh then you’ve got to hustle and get your house ready. Get it on the market. If you were like us, your house is not in show. Yeah. Not show ready. You got to clean out the garage. You got to clean out closets. I mean, the list goes on and on and on. Or you say, you know what? You know what? I’m going to sell my current home first. You can do that. You can make your home show presentable and you sell your home. Now, you got to find the right home fast. That’s right. And the the risk there is well, first of all, you probably aren’t going to have a whole lot of negotiating power because you need a home desperately, right? And and and second, you know, you probably are going to have to settle for something that maybe isn’t ideal and you don’t have time to dicker around with it. You don’t want to accept something just because I got to have a house. I have no place to live. Yeah, that’s the worst scenario. So, pick your poison, right? So, the typical scenarios, you poison number one, poison number two, but there’s more stress because now you need to show your house while you’re still moving. You you’re buying and selling a house at the same time. So, now you get to try to get your house ready while you’re moving out of your house, right? Yeah. So, you know, then you’ve got to deal with finding a storage place, temporary housing. Yeah. Because Yeah. You got to get the the ends of your two transactions. Like you want to close on your house, right? And then buy the new you try to get them to dovetail. Chances are they’re not going to dovetail exactly. Now you’re paying for storage. Now you’re thinking about temporary housing. And now you get to move twice, which means you’re going to have to pay movers twice. That’s the deadline trap. And so if you know this all sounds like a nightmare to you, like it does to us. Yeah. How do we do that better? All [music] right. So, the first thing we want to tell you is we are not financial advisors. No, we have no vested interest on whether you buy a bridge loan or not. I mean, we are motivated to make you not as stressed and have a nice clean transaction for you, but we don’t get compensated. We don’t do bridge loans, but we can connect you with someone who who does. So, just keep that in mind. This is we’re not financial advisors. We have no vested interest. Want to say that upfront. So, with a bridge loan, it’s very simple. You move into your new home, you buy first. You move into your new home, and now your old home is vacant. So, you get to sell your old home after you’ve already moved out. That’s right. And you’re not there to be bothered with showings. It sounds pretty good because you don’t have to hustle and oh, we got to do the dishes. We got to vacuum because someone’s coming to look at the house. Yeah. No, you’ve already moved into your new home here in Prescuit and you’ve got all that done. You’ve negotiated. You had a cash deal. You got a great price on your house here. Now you can move in, take your time, get everything settled, and uh when you’re all done, sell the old house while it’s empty. So, the biggest advantage isn’t the loan itself. The biggest advantage is now you’re making decisions and you don’t have a deadline. That’s right. You know, you’re buying buying a house that you want and you’re not under stress. You’re selling a house. you’re not under stress. That’s really the biggest advantage isn’t the loan. It’s the fact that you’re not making decisions under a deadline, right? Much less stress. Um, believe me, uh, we had a situation when we were moving from Texas to here. Uh, we did not have a bridge loan. We didn’t know there was such a product, which is a great product now, which I’m not sure they had it back then. I don’t think they did. After the financial crash of 2008, they they was a bunch of they kind of went away. Yeah, they kind of went away for a little It’s a new product now, which we will get into in the next segment probably. But so what happened was our deal fell apart and we were under the gun. We had 10 days to get our home sold in Texas. Yeah. Otherwise, we were going to lose our home here in Prescuit. Oh, we have a showing. Put the dogs in the car. Let’s drive around for a couple hours. We did it. I don’t know how. It was not pleasant. It was pretty horrific, actually. And uh yeah, very, very stressful. So, had we had a bridge loan in, we would have had none of that. Less stress, you make better decisions, you avoid rush purchases. It’s just a better way to do it. So, let’s get into the mechanics of all this. How does the bridge loan actually work? [music] So, how does a bridge loan really work? Tell us in plain English, how does it work? Very simple. You contact uh the officer. He goes through to see what you if you qualify. Yeah, of course you have to qualify. Um, he tells you, okay, you want to borrow 900,000, you qualify. This is how much you need to have, you know, to start this loan, what your fee will be. Yeah. And then he will explain to you the interest rate. Yeah. Uh some the interest rate will be a little bit higher than a little higher. A little higher because of course this is someone giving you a huge loan of cash. It’s also a very shortterm loan, right? you know, you’re not going to be it’s not going to take you 30 years to sell your house. So, it’s not a So, you then have one year uh to sell your existing home. He gives you the money up front. You have the loan. You go buy your house here in Prescuit. You have one year then to sell your current home. And there isn’t a second mortgage. You’re not paying another mortgage on this, you know, new loan. You’re not even paying interest. the interest will acrue from month to month. So, basically, you have a one-year loan. Interest is acrewing. Um, but if you sell your existing home in two months, okay, you pay two months of interest. Yeah. It’s not going to be all that much because it’s probably not going to be that long. So, the big misconception is you’re not going to have to pay to make two payments at the same time. That everybody thinks I can’t I don’t want to do a second mortgage. I don’t want to do It’s very simple. And you have a year and you’re collateralizing on both properties. Yes. So your the your existing home will be collateral and the new home will be collateral. So most people qualify. It’s not hard to qualify for a bridge loan, right? And he will go through everything in great length uh in better uh better than we are. Better than we are. But that’s kind of it in a nutshell. Yeah, that’s it in a nutshell. So So what what is the biggest source of stress for your move? What are you dreading most? We’d like to hear from you. Leave it in the comments if you will. Absolutely. All right. So, uh, now that you know how bridge loans work, let’s see whether you should really consider one or not. [music and bell] So, who should consider a bridge loan? Well, I mean, if you have the cash, don’t do the bridge loan. Don’t do a [laughter] bridge loan. Don’t need to. Yeah. If you have other ways to access that, if you have retirement plans, if you have that you won’t have any huge tax consequences, always talk to your financial planner. Sometimes you can borrow from your existing accounts. Yes. And that would be obviously simpler and you won’t have a fee, etc. And you won’t have all the fees. So yeah, if you’ve got obviously if you have the cash sitting around kind of the reason why we we started looking for an officer that could do bridge loans is we get a fair number of clients who come in and they have cash. I mean they and they don’t have to sell their home that they’re in before they buy. So they get to buy before they sell. and just because they happen to have the cash and we saw how easy and simple and stress-free that was. So, we were kind of looking for something like a bridge loan so that we could hook our clients up with it. So, if you’ve got the money, obviously you don’t need a bridge loan. If you can collateralize, you know, if you’ve got a retirement fund and use that for collateral and and come up with the cash, then you probably don’t need a bridge loan. This is for people who either don’t have the cash and they can’t pull the cash together. you can pull together a bridge loan really fast and that’s that’s what’s nice about it too. So the here are some of the factors that make a bridge loan even more compelling. So if you want a house that is new on the market, so it just went on the market. If the house is nice as at all and chances are it’ll be nice because you want it, uh then they’re not going to take a contingency. They’re just they’re not going to do that straight up front. Now, if the home’s been on the market for a long time, then yeah, they’ll they’ll entertain a contingency. But if a house is new on the market, you certainly you’re going to have to pay have to pay list price, and chances are they’re not going to want a contingency. So, you’ll need a bridge loan. And most people will not most sellers will not accept a contingency if you’re not even on the market. Yeah. They would prefer to see you’re on the market. you’re actually under contract with a firm close of escrow identified, preferably even out of inspection period. Yes. So, that’s another thing to consider. That’s if you’ve got are not automatically accepted. If you’ve got a house that’s that’s already under contract, the buyer is paying cash, it’s past inspection, that’s pretty close to cash, right? And they’ll be more open to that. Yeah. But if you’re not even on the market yet, that’s why a bridge loan comes into play because you can get your offer in. Yeah. And uh they don’t care about your house being on the market. They just see it’s a cash deal. Yeah. I wouldn’t bother if you find a house and you like the house, you know, if if you’re not really in love with the house. Maybe you [clears throat] could risk I mean, it depends on how much you love the house. uh you know, is it worth it to you uh to to risk not uh not getting the house to to do, you know, whatever you need to do to sell your house or whatever? You know, you’re risking losing the house. If you really love it, then maybe you should think about the bridge loan. Yeah. And you know, selling a house can sometimes take a while. It can be slow. Yeah. So, you put an offer in and you say, uh you if you’re lucky, somebody will let you have a 45day close. Uh usually it’s a 30-day close. Some people might even allow 60 days, but you’re going to have to put more earnest money down. You’re going to have to have some of that earnest money go hard. Yeah. Meaning after 30 days, the seller gets to keep some of that. Yeah. Um, you know, and so, and then you still have the pressure of, oh my gosh, I have 45 days. What if I can’t get this sold? What if it goes under contract on day 40? Yeah. You’re not going to close on time to get the funds out to buy this house. So, it’s it just Now, if the house has been on the market for a while, we might be able to negotiate a long escrow and give you maybe a month to try to sell it. And then if it doesn’t sell, then you do the bridge loan. We’ve done that a few times. Yes. Depends on what the seller’s willing to take an an escrow. That’s that that’s that long. You know, you’ll know if you’re in a neighborhood and the homes sell fast. Yeah. I will tell you if you haven’t looked at that in a while, you know, it’s been a few years, homes don’t sell as fast as they used to during CO. Nope. You know, you may think homes sell really fast. Double check. You know, if you’ve talked to a listing agent in your area already or you know someone who sold a house, you know, get get the finger on your p get the finger on the pulse of your market. Uh because if it’s going to be slow, then a bridge loan probably makes sense. Absolutely. And then if it’s a long distance move, that that just raises the stakes for everything. If it if it’s like cross country, right, you know, that makes logistics really really hard. Again, circling back to our Texas move. Horrible. The movers were showing up and we weren’t closed. Yeah. Not good. Yeah. So, if you’re finding this information helpful, we’d really appreciate it if you’d like this video and subscribe so you don’t miss any of the Prescat scoop. If someone you know is planning a move to the Prescuit area, please share the video with them. We appreciate it. Absolutely. All right, let’s finish by putting everything together into a realworld example. Oh, real world. [music] This is the section we told you about at the beginning where we show you why the net cost of a bridge loan is often a lot less than people think. So, we figured we’d give you a specific example. So, uh typically, you know, the homes that people are buying here, you typical with interest and the fees together run 25 30,000 something like that. I mean, if you’re buying a lower-end home, it might not be as much, assuming you’re buy a home that’s somewhere around a million bucks. This seems like a lot of money, but here’s the thing. You are selling a home on your that you’re probably selling a home. Most of our clients are selling a home that’s more expensive than the home they’re buying here. So, let’s say you’re buying a home for a million dollars in Prescuit. You might be selling a home for $2 million. Okay? So, if you are under pressure to sell your home where you are now, you might take a an offer that’s less than list price. 10,000, 15,000, 20,000 less than list. Okay. Well, 15,000, that’s already half of all your fees on the on the bridge loan. Correct? Now, you need to negotiate on this side. Well, with a bridge loan, that’s like cash. That’s like a cash offer to the seller. So, you can usually get a home for 10, 15, sometimes $20,000 less than list depending on how they how they listed it. You know, some people list really high. We’ll we’ll tell you about all that, but assuming that they listed it about where we would list it is kind of what we think the market rate is. If you go in cash, that’s 10, 15, sometimes $20,000 less. That’s the other half, right? Plus, if you avoid storage, you know, you’re moving twice, you’re going to have to pay for at least one move because hello, you’re moving. But if you move your stuff to Prescuit, let’s say, now you’re going to pay for storage for, you know, a month or something, that might be $1,000. Then you got to get more movers. You got more movers. That’ll be another three or 4,000 just for you have to rent someplace. Yeah. Now you’re staying in a hotel. You’re, you know, Airbnb. you might spend the better part of another $10,000 just on that stuff. So all of those items, you know, would make up for the cost. Yeah. So if you Yeah. six of one half dozen of the other. Yeah. If you look at the net cost, yeah, the bridge loan can cost you a lot of money, but it also saves you money. Our experience is that in the end about break even. You know, you usually, you know, I don’t people don’t usually come out way ahead, but they usually don’t come way behind. Usually they about break even. The bonus is really eliminating the stress 100%. If we were to make another move, yeah, which God help me, I hope not. But if we do, uh, I will do a bridge loan because I have a lot of animals at home. I have some dogs. Even a local one would probably Yeah, even a local move, I would do it just because I I don’t stress. We’re no longer young. Most of our clients coming in, they’re retiring or older than that. You know, we’re not in our 30s anymore. This is a highly stressful thing. Yes. And you reach a certain age, stress is hard. So, yeah, the eliminating stress is a big deal. Don’t underestimate the importance of that. Absolutely. And you want to be excited about moving to your new house. You don’t want to be like a beaten dog by the time you arrive here. You just want to be happy about the should be a happy time for you. All right. So, now you’re probably wondering whether a bridge loan would actually make sense for your specific situation. Hey, if you’d like to talk to us about it, we’d be happy to help you out with that. It’s easy to schedule some time on our calendar and we can dig into all the details together. Just go to picklelady chat.com or use the QR code we’ll provide here. We’ll also put a link in the description. A bridge loan solves one piece of the relocation puzzle. But now you may be wondering about your overall cost picture. In our cost of living video, we’ll show you the expenses you can expect in Prescuit and how to compare them to the ones you have now. You may be surprised by what you find. Click the thumbnail provided to watch it now. And in the meantime, we hope you found our video informative and fun. Yeah. And we hope to see you next time. Kiki also says bye now. Bye.
