What Are the Fees and Costs Involved in a Buy Before You Sell Program?

Buy Before You Sell programs involve fees in addition to the standard closing costs of your new purchase mortgage. Understanding the full cost picture before you commit is essential.

BBYS Program Fees

• Program fee: Most BBYS providers charge a fee — typically 1%–3% of the equity advance or bridge amount — for the service of providing the transition financing
• Bridge loan interest: If a bridge loan is used, interest accrues on the outstanding balance during the transition period at the bridge rate
• Extension fees: If the sale window needs to be extended, additional fees may apply

New Purchase Mortgage Costs

Standard closing costs apply to the new purchase mortgage — origination fees, appraisal, title insurance, escrow, and prepaid items. These are independent of the BBYS program fees.

Selling Costs on Departing Residence

When your current home sells, you will pay the standard costs of a California home sale — agent commissions, transfer taxes, escrow fees, and any outstanding HOA or property tax prorations.

Is the Total Cost Worth It?

For most California move-up buyers, the cost of the BBYS program is offset by the ability to make a non-contingent offer — which can mean winning in a competitive situation where a contingent offer would have been rejected. The alternative cost (renting temporarily, storing belongings, moving twice) often exceeds the program fee.

A cost worksheet (illustrative example, not a quote)

Assume a $200,000 advance. Program fees are typically 1%–3% of the advance or bridge. If interest accrues on a bridge, that adds a second cost. Using a hypothetical 9% bridge rate for four months:

• Program fee at 1%: $2,000; at 3%: $6,000
• Bridge interest: $200,000 × 9% × 4/12 = $6,000
• Subtotal of transition-specific cost: $8,000 to $12,000

Not every structure includes bridge interest, so the real subtotal depends on the program you use. The new purchase loan’s closing costs and the selling costs of the old home sit on top, and neither depends on the transition program.

Questions to ask any provider

• Is the fee a percentage of the advance, a flat amount, or both?
• When is it paid: at closing on the new home, at sale, or both?
• Is any of it refunded if the home sells quickly?
• What are the extension terms and costs if the window runs out?
• Who may list and price the departing home, and what happens if you disagree with the provider?

Costs people overlook

• Insurance and utilities on both homes during the overlap.
• Repairs and staging before you list.
• Moving twice if the program is not used or if the old home is rented temporarily.

Putting the totals side by side

Build a one-page comparison with three columns: using a transition program, writing a contingent offer, and selling first. In each column, list the fees, the carrying costs, the moving costs and the chance of winning the home. The cheapest column on paper is not always the best, but seeing the numbers together makes the trade-off clear.

Frequently asked questions

Will I see the costs before I commit?

For the new purchase loan, a Loan Estimate is delivered within 3 business days of application. Ask the transition provider for a written fee schedule at the same time so you can compare.

Are program fees tax deductible?

Consult a tax professional about how fees and any interest are treated in your situation.

Does selling faster lower my cost?

It generally lowers bridge interest and avoids extension fees. A flat program fee may not change. Confirm how your program handles each item.

Related guides

• How long you have to sell
• If your home does not sell in time
• Is it a good fit in California
• Loan Estimate and Closing Disclosure

Quick recap

• Add program fee, bridge interest, new-loan costs, and selling costs for a true total.
• A faster sale generally reduces bridge interest, but the program fee may be fixed.
• Get the fee schedule in writing, including any extension fee, before committing.