You found the right Los Angeles home, but your current place is not sold yet. In a high‑price, low‑inventory market, timing is everything and delays can cost you the home you want. With the county’s median sale price hovering around $909,000 and days on market shifting, it is no surprise many buyers explore ways to buy first and sell second. This guide breaks down how bridge loans and rent‑backs work in Greater LA, what they cost, and how to protect yourself so your move feels calm and planned. Let’s dive in.
Why buy before you sell in LA
Los Angeles stays competitive, and desirable homes often draw quick attention. At the same time, some listings are taking longer to sell than last year, which can complicate back‑to‑back closings. You may also face insurance hurdles in wildfire‑exposed areas that affect closing timing and costs. Planning your financing and possession strategy up front can keep your move on track.
Bridge loans explained
A bridge loan is a short‑term loan that lets you use equity in your current home to help purchase your next home before your sale closes. It fills the timing gap so you can make a strong, non‑contingent offer. Learn the basics and typical terms in this overview of bridge loans from Forbes Advisor.
Pros in a competitive market
- You can write a more competitive, non‑contingent offer.
- Underwriting can be faster when you have strong equity and credit.
- The loan is short term if your home sells quickly.
Costs and risks to expect
- Interest rates and fees are meaningfully higher than a traditional mortgage. Consumer guides often describe mid‑to‑high single digit rates into the low teens, with 1 to 3 percent origination costs. See this cost explainer from LendingTree.
- If your current home takes longer to sell, you may need to carry two payments or refinance.
- Lenders have equity, appraisal, and loan‑to‑value requirements you must meet.
When a HELOC or refinance fits better
If you have ample equity, a home equity line of credit or home equity loan can be a simpler, potentially cheaper source of funds than a bridge loan. Learn how HELOCs work here: home equity line of credit. Always compare total costs, timelines, and lender requirements.
Non‑financing timing tactics
Sale contingency and kick‑out clause
You can make your purchase offer contingent on selling your current home. In competitive LA neighborhoods, sellers often prefer non‑contingent offers, but a short contingency and a kick‑out clause can help. Here is a plain‑English overview of contingent versus pending status from U.S. News Real Estate.
Carrying two loans temporarily
If you qualify, you can carry both mortgages for a short period or use savings to bridge the gap. This can be the cleanest route, but it requires strong cash flow and a clear plan to sell.
Rent‑backs: let the seller stay after closing
A rent‑back, also called post‑closing occupancy, is an agreement that allows the seller to remain in the home after closing for a set time while paying an agreed rent. California has standard forms and addenda that address short stays and longer lease‑style occupancy. See form guidance and recent updates from Tyler Law LLP.
Short vs. long stays
- Short rent‑backs under 30 days are common and often handled with a simple “seller in possession” addendum.
- Once occupancy hits 30 days or more, many professionals recommend a formal lease since lender rules and landlord‑tenant protections can apply. Review practical thresholds in this article from Broker Risk Management.
Lender and HOA checks
Many lenders limit rent‑backs to 30 to 60 days for loans written as owner‑occupied. Always get your lender’s written approval for any rent‑back terms before you remove loan contingencies. If you are buying a condo or co‑op, confirm HOA rules on post‑closing occupancy early.
LA rules to know
Los Angeles has local tenant‑protection rules. Many single‑family homes that are the only residential structure on the lot are generally not covered by the city’s Rent Stabilization Ordinance, but other laws can apply depending on the property. Check coverage details through the Los Angeles Housing Department.
Protect yourself in a rent‑back
Use a written agreement and spell out the details. These items are commonly recommended in legal and brokerage guidance:
- Exact dates and the time keys must be returned.
- Rent amount and when it is due.
- A meaningful security deposit or escrow holdback from the seller’s proceeds. See how escrow holdbacks work in this overview from Hollywood Escrow.
- A per‑diem holdover penalty for late move‑out.
- Responsibility for utilities, maintenance, and any association rules.
- Insurance requirements: buyer’s homeowner policy in place at closing and seller’s renter insurance with buyer named when possible. See common insurance clauses in this guide from Lowndes Law.
- A final walkthrough while the home is vacant before escrow releases holdback funds.
LA timing risks to plan for
Wildfire risk and insurance availability can affect both closing and carrying costs in parts of Greater LA. Premiums and underwriting can change quickly, so verify coverage early when planning a buy‑before‑you‑sell move. Recent coverage highlights the scale of exposure across LA neighborhoods with wildfire risk.
A simple game plan
- Talk with your lender about bridge, HELOC, and carrying‑two‑loans scenarios. Ask for written terms and estimated costs for each path.
- Align your purchase timeline with a clear pricing and prep plan for your current home.
- Decide on a backup: rent‑back, short contingency, or temporary housing if your sale lags.
- If accepting a rent‑back, get lender sign‑off, use the correct form, and set an escrow holdback that fits the risk.
Ready to map out your move with a calm, step‑by‑step plan? For local guidance across the Antelope Valley and Greater LA, connect with Lori Fischer for a conversation about your best path to buy before you sell.
FAQs
How do bridge loans work in Los Angeles?
- A bridge loan lets you tap equity from your current home to fund your next purchase before your sale closes. Expect short terms and higher costs than a standard mortgage, as outlined by Forbes Advisor.
What do bridge loans typically cost in LA?
- Consumer guides describe mid‑to‑high single digit rates into the low teens, plus about 1 to 3 percent in fees. Compare lender quotes and structures, and review this explainer from LendingTree.
How long can a seller stay after closing with a rent‑back in LA?
- Short stays under 30 days are common; 30 days or more can trigger landlord‑tenant issues and lender limits. See timing considerations from Broker Risk Management.
Who handles insurance during a rent‑back in Los Angeles?
- Buyers should have a homeowner policy effective at closing, and sellers should carry renter insurance and indemnify the buyer when possible, per guidance from Lowndes Law.
What protections help if the seller does not move out on time?
- Use a written agreement with a per‑diem holdover penalty, a sizable escrow holdback, and clear default remedies. See how holdbacks work with Hollywood Escrow.
