In a nutshell:
A short-term loan (also called a "swing loan" or "gap financing") taken out that's backed by the property a buyer currently owns. It "bridges the gap" between the time a home is sold and a new home is bought. These loans are typically for 6-12 months and come with ~2% higher interest rates than current fixed-rate mortgages.
- It allows you to shop around and nail down your dream home before your current one gets sold.
- Buyers are faced with a high interest rate and high closing costs.