Dated: May 19 2021

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Afraid of Being In-Between Homes

Buying a home and selling a home are equally stressful, but what about when you are trying to coordinate both at the same time?  For every home listed, another home has to be bought, and our current market remains hot due to the continued limited inventory.  Until inventory outpaces demand, securing your next home might take a little longer than anticipated.  But being in-between homes is more common than you think, and I have a plan if it happens to you.

Selling Before Buying

Selling your home ahead of buying is the most risk-free alternative, as neither transaction is contingent on the other.  Plus, you'll know exactly how much money you will net from the sale of your home because the sale has closed.  However, this requires your family to make an extra move and have a place to live while you wait to close on a new home, so in terms of convenience and expense, it’s not always the best scenario.  If you have the ability to secure a short-term rental (see 'Look For a Vacation Rental' below), or to put your belongings in storage and stay with family, then you can enjoy the luxury of taking your time to look for, and close on, your new home.  One other option that sometimes works out is to rent your home back from the buyers of your current home while you wait to close on your new home.  This works well when the buyers are not in a hurry to move in themselves, and you can agree on a timeframe for you to remain in the home.   On the plus side, you wouldn't have any contingencies on your new home purchase because it's already sold.  The drawback to renting back your home is that you're on a deadline, and if your purchase doesn't go through, you still have to move.

Buying Before Selling

Buying ahead of selling is a dream in terms of convenience.  You can take your time moving, and maybe do some renovations or decorating before you move in.  But will you qualify for a new mortgage without a contingency on selling your existing home?  If you can swing the mortgage, or are paying cash, it may be a great option for you.  (Or see 'Consider a Bridge Loan' below).  Remember to realistically consider how long you can afford to maintain two properties–with maintenance costs–in case it takes you longer than expected to find a buyer for your present home.  In this scenario, you may want to rent your new purchase back to the sellers, or list it as a short-term rental (if allowed in your area), while you wait to close on the sale of your existing home.

Buy With a Contingency to Sell

For many people, this is the ideal scenario.  You put in an offer on a new home, and closing is contingent on finding a buyer for your current home.  You only have to move once, and you don't have to worry about carrying two mortgages.  Some sellers are willing to wait, but it depends on the seller and on market conditions.  A home sale contingency also weakens your offer.  If you're competing with a buyer who doesn't have any contingencies, the seller is likely to go with the other buyer. Ask a knowledgable real estate agent about the odds of buying a home with a home sale contingency.

Sell With a Contingency to Buy

Or, you can do the opposite and put a clause in your contract that essentially states that you won't finalize your home's sale until you find a new home.  Ordinarily, buyers find such clauses to be off-putting because it creates a lot of uncertainty in their own timelines.  However, when demand is very strong like it is now, there may be a buyer out there who has a more flexible timeline for their move.  (For instance, a family in the market for a home but doesn't want to move until the new school year starts).  We'll discuss it together to see if a clause would make sense for you.

Look For a 'Vacation Rental' or Corporate Housing

While the seasonal vacation rental market is projected to pick up as travel rebounds following all that 2020 brought, these rentals weren't going as quickly as annual rentals.  In other words, there are more options to be found, often at prices lower than they'd traditionally go for.  Look out for deals for off-peak rentals especially.  Another option is corporate housing since they typically offer more flexibility as you settle into your new area.  Both vacation rentals and corporate housing tend to be furnished, so if your furniture is in storage until you're able to buy your new home, you'll be comfortable the whole time. 

Consider a Bridge Loan

One of the reassons sellers panic about being in-between homes is dipping into their savings to cover the unanticipated living expenses, especially as the sale is pending on their current home.  A bridge loan is a short-term loan that can cover you in this instance.  (It can also add to your home purchasing power, in case that opens up more options to consider buying).  The donwside is that these loans often have higher interest rates and quicker repayment periods.  Do the math and read the fine print to see if this makes sense for your situation.

Consider your buyers and sellers carefully when trying to coordinate a sale and purchase within a short amount of time.  The last thing you need is a seller or buyer who is displaying signs of being uncommitted to the deal.  While no transaction is guaranteed until all the closing documents have been signed, when you need a purchase or sale to coincide with your schedule, you should carefully evaluate who you sign a contract with.  A contract with contingencies on other deals going through, a lender expressing doubt about final financing approval, a low good faith deposit, buyers asking for unreasonable repairs or allowances, or sellers whose moving plans are questionable are red flags that your deal could fall apart.

When you're putting your home up for sale, it's easy to let anxiety take the wheel.  The fear of selling your home before lining up your next home is one of those worries that commonly come up when the market is hot.  However, it's also one with a few easy solutions -- depending on your unique situation, I may have even more creative ideas.  You never know if such a scenario may be a blessing in disguise too.  Just think, next year at this time, you may be sitting pretty in an affordable vacation rental in a fun destination, taking your time to find your dream home.

Let's talk about your options.  If you're struggling to find your next home, but you're ready to sell your current home, let's talk about your unique situation.  Just give me a call (or shoot me a text) at 702.805.4480 and we'll figure out a plan that will work best for you and your family.

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Lisa M Fraser

I AM REDEFINING REAL ESTATE I believe that the vast majority of real estate professionals are underserving their clients and we need to do better. Helping people buy or sell real estate should not be....

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