When a homeowner wants to move up or downsize, the first question isn't which house. It's which order. Do they sell first, or buy before you sell? That one choice shapes the budget, the offer and how many times they move. If you plan it before the first showing, the whole thing runs calmer. Here's how I lay out the options, how each one works, and the timing traps that break deals.
The short answer
There are five common paths. Sell first and rent the home back from the buyer for a short time. Buy first using a bridge loan or a home equity line. Close both on the same day. Write a purchase offer that depends on the sale. Or, for clients with the cash, buy with cash and get a mortgage after. Each path trades money, offer strength and stress in a different way. Selling first makes the strongest offer. Buying first means one move but costs interest and needs the client to qualify with two payments. A sale contingency is free but weaker when other buyers are in the mix.
Step by step
- Price the current home first. Run a real pricing report on the home they own. Their equity is likely the down payment, so the plan rests on a realistic number. See how to explain a CMA.
- Send them to a lender early. Ask the lender to run the file both ways: with the old payment counted and without it. Many lenders count both payments until the old home is under contract with contingencies cleared, or sold.
- Ask the three deciding questions. Is the equity the down payment? Will the house they want wait? How much disruption can the household take (kids, pets, work, a baby on the way)?
- Pick the path. Use the table below.
- Open an equity line before listing, if that's the plan. Many lenders won't open a new line on a home that's already listed. Order matters.
- Write the contracts to match. A sale contingency, a rent-back (post-closing occupancy) agreement, or matching closing dates. Use the current state forms from the Colorado Division of Real Estate. See Colorado contract basics.
- Line up both closings. Ideally one title company on both. Sale in the morning, purchase in the afternoon, if it's same day. Proceeds wire after the sale records.
- Watch both appraisals. A low appraisal on the sale side cuts the proceeds that fund the purchase. See appraisal gap explained.
The five paths
| Path | How it works | Upside | Trade-off |
|---|---|---|---|
| Sell first, rent back | Close the sale, rent the home back for a short time, buy with proceeds in hand | Strongest purchase offer, firm budget | Tight move window; the buyer's lender may limit how long the seller can stay |
| Bridge loan | Short-term loan against the current home funds the down payment | One move, buy without a contingency | Higher cost, interest and fees, two payments for a while |
| Home equity line | Line opened before listing, drawn at the purchase, paid off at the sale | Often cheaper than a bridge | Must open before listing; two payments for a while |
| Same-day double closing | Sale and purchase close the same day; proceeds wire across | No loan, no rent | One delay on the sale side delays the purchase |
| Sale-contingent offer | Purchase only closes if the current home sells | No added cost | Weaker offer; may lose to clean offers on fresh listings |
For cash buyers: delayed financing lets a buyer purchase with cash, then take a cash-out refinance within a set window after closing. It wins the house like a cash offer, then puts the cash back in the bank. The lender sets the rules, and the purchase usually must be free of any loan on that home. See Fannie Mae's Selling Guide and ask the lender.
A worked example (illustration only)
A client's home is worth $650,000 and they owe $280,000. A lender lends up to 80% of value, minus the current loan.
| Line | Amount |
|---|---|
| 80% of value | $520,000 |
| Minus current loan | -$280,000 |
| Possible bridge or line amount | $240,000 |
Illustration only. A lender sets the real terms. Lenders set their own limits, rates, points and fees, and the client still must qualify with both payments. The annual percentage rate (APR) would differ from any note rate. This is not an offer of credit. Program rules change. Check current rules at consumerfinance.gov.
How to explain it to your client
"Before we look at homes, let's pick the order. If we sell first, your offer on the next home is strong and your budget is locked, but you may need a short rent-back or a short rental. If we buy first, you move once, but you'll carry a short-term loan and two payments for a bit. Or we can line up both closings on the same day. Your lender will show us what you qualify for each way, and then we'll choose the one that fits your family."
Watch-outs
- Pricing from hope. A bridge loan comes due. An overpriced home can sit past the term.
- Two payments in the ratio. A client who qualifies easily on one home may not on two.
- Rent-backs that run long. The buyer's lender may treat a long rent-back as a rental. Keep it short and in writing.
- Wire timing. A late-afternoon sale can't always fund a same-day purchase. Schedule the sale early.
- Taxes on the sale. The home sale exclusion rules are a CPA question. Point them to IRS Publication 523 and their tax pro.
- Contingency language. Write it with the current state forms and your managing broker's guidance.
Further reading
- Bridge Loans in Colorado on kennarealestate.com
- Selling and Buying a House at the Same Time in Colorado on kennarealestate.com
This is training for real estate agents. It isn't legal, tax or lending advice. A licensed loan officer sets loan terms. Check with your managing broker. Talk to an attorney or CPA.
Questions
What is a bridge loan?
A short-term loan secured by the home a client already owns. It turns equity into a down payment before the old home sells, and it's paid off from the sale.
Is a home equity line cheaper than a bridge loan?
Often, yes. But it usually has to be opened before the home is listed.
When does a sale-contingent offer work?
Best on homes that have been on the market a while, where the seller has fewer options. On fresh, busy listings it often loses to clean offers.
What's a rent-back?
The seller closes the sale and stays in the home for a short, agreed time, paying the new owner. It's written into the contract.
What is delayed financing?
A cash purchase followed by a cash-out refinance within a set window. The lender's guidelines control the details.
Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.