When the next move depends on selling your current home, it is important to evaluate all options available. Here are some options to consider to strategize the sell, buy, and move.
1 It may be worth finding a rental.
Evaluate the rental market in advance of placing your home on the market. How many rentals are available that meet your needs for temporary housing while you find a new home? Some clients elect to pack up the home and place it all in storage so they can rent a furnished short-term rental while they find a new home. More traditional rentals will most likely require a minimum six-month lease. What are the disadvantages? Mainly – the potential stress and cost of moving twice. Of course, if you have family nearby that can provide space for you for the next couple of months; that would be even better. Right?
2 You can also decide to Sell on contingency.
In other words, only accept offers from buyers that are willing to allow you time to find a new home before going through with the deal. If you can’t find a home in an agreed-upon period of time, you or the buyer have the right to cancel the deal or extend the time period. This strategy can work when the buyer is also selling their home. Parallel closings are complex but they are possible when the right parties and pros are involved.
3 Also, Consider Buying on contingency.
In certain markets, you can write an offer for a home contingent on you selling your home in X period of days. This is a reasonable strategy but totally depends on the competition you have with other buyers writing offers on the home you want. If the other buyers do not have to sell and can close faster than you, they will be the preferable offer.
Generally speaking, in multiple offer conditions, you will pay more for the home than a non-contingent sale buyer. Because you will need to the seller a reason to wait for you to close on your current home. The further you are along on the selling of your home; the better. If you already have a contract and the buyer has removed all contingencies, and you are closing escrow next week; the more solid you are as a “contingent buyer”.
4 Equally, You can also Sell your home and negotiate a rent back with the buyer.
This option allows you to sell your current home with a typical 30-day close of escrow and then continue to stay in your current home up to 60 days after closing by paying “rent” to the new owner. The amount of rent paid will depend on the competitiveness of the market. This strategy can work when the buyer of your home is renting month-to-month and has flexibility with move-in/out time. The Advantages: time to look and only one move date. Disadvantages: you still only have about 90 days to find a new home and close on the new home.
5 Bridge Loans are another option.
If you have equity in your home, there is a way to borrow on that equity to provide a down payment on the new home without having the proceeds of the sale you can bridge the sale. It is basically a “cash out” loan via a refinance or an equity line. The allowable amounts vary but sometimes up to 70% of your equity can be available for use as the next downpayment. Advantage? You do not have to sell first. Disadvantages: the cost of a bridge loan and or private money loan may cost more than typical cash out refinance.
6 There is also more Creative financing:
Look to borrow from 401Ks. Some allow a six-month loan without a tax withdrawal penalty. Pay it back when the home sells. Consider borrowing from family. If you need a loan officer to consult with regarding your options; call me.
OK! That’s a lot of information but hopefully just enough to let you know selling and buying at the same time IS possible! Now, let’s see where the market is and talk about how to make your offer successful. You can always find up-to-date market stats on my website TalkToCJ.com. For more specific questions schedule a meeting with me.