For many people either moving or retiring to Maui, the process begins with selling your current home.  The process of selling your current home and buying a new one may feel daunting, so I thought this short article about timing might be helpful for you.

Selling Before Buying?

It's not uncommon for buyers to not really know where to start when they already own a home but want to make a move. After all, you need cash for a down payment and closing costs on your new home, but your cash is probably tied up in equity in your current home. That means you probably want to sell your current home first, but you also don't want to be stuck with nowhere to live while you look to buy a new home.

Ideally, you want to wait until you have an offer on your home before you seriously start looking for a new home to buy here on Maui.  I you are in a market where there is a lot of inventory and homes are taking a while to sell, it may be best to list your home sooner.  On the other hand, if homes are getting snatched up as soon as they go on the market, you probably want to take the reverse approach.  However, you must factor in that the inventory on Maui is limited and it may take quite a while to find a place that works for you.  Timing is everything.

So what are the solutions?  I talked before about the importance of using contingencies.  This is a prime example of managing your transition to Maui using stipulations in your real estate contracts.  I you get an offer on your current home, opt for a long contract time on the sale or put in a contingency of sale for securing a replacement property so you have plenty of time to look at the Maui inventory and find a home to buy.  

 

 

Conversely, if you find a home on Maui that you want to purchase, you may want to make your purchase offer contingent on the sale of your current home.  However, the seller may not want to have a contingent offer, and if the home is definitely the one you want, you will need to come up with another solution to get them to accept your offer.  One way to make this happen is a bridge loan.  A bridge loan is a short-term loan designed to bridge the gap between the time when you buy a new home and when you manage to sell your old home. Typically, buyers rely on cash they get when they sell their old home to use as a down payment on the new home. The bridge loan provides you with the cash you need in order to complete the purchase of your new home. It can either be designed as a second mortgage secured by your old home or a cash-out refinance of your old home. Either way, it is basically allowing you to tap into the equity you have built in your old home.

Most bridge loans have a term of only six months, which is plenty of time to sell your old home in most markets. If you think your home will not sell within six months, you will need to work out a longer term with your lender. In addition, be aware that most bridge loans are due in full as soon as your home sells.

Either way you go, the important thing is to start your transition to Maui as soon as you can and give yourself enough time to easily manage the move.