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Why I recommend buying your next home before selling your current home

By
Real Estate Agent with CATARRA CA BRE# 01871201

Why I recommend buying your next home before selling your current home

I know for many people outside of the Silicon Valley buying before selling sounds like a very dumb and unnecessarily stressful thing to do.  I have several reasons for making this suggestion; the first one is the lack of inventory to buy and second, the lack of rental options.  

Unless you have a relative or friend that is willing to let you move in with them why you look for your next home you could be out of luck finding a rental.  I had a conversation in the parking lot with a gentleman at my gym that had recently sold his house.  He was very frustrated because he could not find a short term rental, especially since he had pets.  He was starting worry that he was going to be living in a hotel or his car for the next few months until he found another home he liked.

I know the downside to this strategy is that you have to qualify to pay both mortgages and getting a pre-approval under those circumstances can be a challenge.  But I recommend looking into this option if possible.

The other huge benefit of buying first and then selling your house second is that you lose your emotional attachment to the house.  Once you move out all your stuff and into your new home the old one is just a house.  You can start thinking of selling as a financial transaction it is.  You will take the negotiations less personally when you have two mortgages to pay and live somewhere else.

It also makes it easier to stage, the stager can bring in all their stuff and you don't need to worry about where you are going to store half the furniture the stager told you that you needed to get rid of.  You also don't have to worry about people snooping in your closets or any of your things going missing.  

Plus if you have pets they are not traumatized by having strangers coming in and out of their space.  Pet lovers sometimes do not know what a big turnoff their pets are to a potential buyer.  Here in Silicon Valley you have people from all around the world and many come from a culture that does not have pets in the home.  Seeing Fido’s and his food bowl can be all that that they remember about your house and can be the reason they won’t buy it.

Another option is to ask for a generous rent back until you find another home as part of the closing.  I think even the most generous buyer is not going to want you to stay for more than 60 days after the close of escrow.  This will mean that you still need to be very aggressive in looking for your next home.

However, no matter what you do have a strategy in place before selling your property.  The Silicon Valley is not an easy market to find a new home or a temporary home.  I get at least 3 or 4 calls a week from people moving to the area desperate to find a rental property and you will be competing with them for the few rentals available right now.

I would be happy to provide a no obligation selling strategy for your home, just give me a call.

 

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Comments(38)

Bruce Kunz
C21 Solid Gold Realty, Brick, NJ, 732-920-2100 - Howell, NJ
REALTORĀ®, Brick & Howell NJ Homes for Sale

Hi Carla. Timing the sale and purchase is up near the top with the most stressful parts of switching homes. You've presented an excellent explanation of the reason to buy before selling if you can.
Thanks for sharing!
Bruce

Aug 16, 2012 01:47 AM
Jayne Esposito
Coldwell Banker - Morgan Hill, CA
SRES, GREEN
You have spelled out the market in our area precisely! I have several buyers who are taking up the space in those short term rentals trying to buy too!! These are people who had a lease and are now going month to month. The landlords don't mind....they know as soon as their tenants vacate, someone else will be at their heels ready to move in! I am seeing the rent back clause more and more these days.
Aug 16, 2012 02:32 AM
Melissa Marro
Keller Williams First Coast Realty - The Marro Team - Orange Park, FL
Jacksonville Real Estate and Home Staging

I'm grateful that you qualified this by saying to stage the vacant home you move out of. Since the majority of expired homes are also vacant, this makes a tremendous difference in marketing and net proceeds. 

Aug 16, 2012 02:53 AM
Carla Dimond
CATARRA - Mountain View, CA
(Silicon Valley)

@Donald, agree you really need a strategy before even thinking about selling

@Wayne, so true but if you can do it, it is a great option

@The Christiansen Team, the Silicon Valley is different than the rest of the US 

@Michael, you need to really think about picking an offer from a buyer based on rent back right now

@Fernando, that is why I have my clients talk to a loan officer before putting their house on the market, know your options

@Mike C, I wish your clients the best

@Chuck, glad to hear it worked out for your clients

@Richie, I let them decide this with their loan officer

@Beverly, we are dealing with extremely low inventory so timing is very difficult

@Thanks Betty!

@Vanessa, thank you

@Wika, the Silicon Valley is high demand, we are on target to have record breaking prices in some areas

@Evelyn, it is a stressful option with many ways to keep you awake at night

@Adrian, it's hard to explain this to others in a buyers market!

@Coral, not everyone has family to stay with and hotels are not always pet friendly

@Lottie, I try and use a "rent back sweetener" with my buyers if we can

@Bruce, thank you for your kind words

@Jayne, thanks for the validation:-)

@Melissa, Vacant homes should be staged for faster sales and better offers

Aug 16, 2012 03:30 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

There are always so much to consider when buying and selling.  For those who can do this, it's a great way to go.  I've seen "subject to finding suitable property" in listing comments and that can scare a buyer off.  What if the seller doesn't find "suitable property" after they have accepted our offer?  Again, great way to go if it can be done. 

Aug 16, 2012 03:59 AM
Carla Dimond
CATARRA - Mountain View, CA
(Silicon Valley)

@Carla, there is so much pressure in Silicon Valley to come in with NO contingencies offers right now to be competitive.  Really tough to be a buyer, so you have let a seller understand what they will be facing on the other side

Aug 16, 2012 04:10 AM
Chris and Dick Dovorany
Homes for Sale in Naples, Bonita Springs and Estero, Florida - Naples, FL
Broker/Associate at Premiere Plus Realty

It's difficult but not unusual.  I don't think bridge loans are as popular as they have been in the past.  I was stuck with a home for 4 years after moving on and right now I've been straddled with another condo ever since the market crash 5 years ago.  Luckily I had a renter for the condo but it's still a pain to have both.

Aug 16, 2012 04:21 AM
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.
Good reasons for buying before selling.
Aug 16, 2012 04:48 AM
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

I've actually moved to places where I couldn't find a suitable rental and ended up purchasing. But the purchase was also usually not what I would have done for the long term. It usually turned into a 3-step move.

Aug 16, 2012 08:20 AM
Carla Dimond
CATARRA - Mountain View, CA
(Silicon Valley)

@Chris & Dick, bridge loans have been gone for a long time for most of us.  But they are possible in the private banking world

@Kevin, thank you

@Hella, that can get expensive to buy and sell quickly

Aug 16, 2012 08:36 AM
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa
It definitely depends on your market. Most buyers cannot get financing for two homes. Planning is key. We often suggest that sellers start moving all their extra stuff into storage or pods until their home sells. That way it is staged better to sell and the moving process is smoother. Having a few homes in mind to buy will narrow your search easily once the current home sells. Asking for a longer escrow period, maybe 60 days helps too. Great points!
Aug 16, 2012 11:41 AM
Stephanie McCarty
McCarty Homes - Canton, GA
REALTOR

if a seller can make it work, it truly is the best situation.

Aug 16, 2012 12:22 PM
Carla Dimond
CATARRA - Mountain View, CA
(Silicon Valley)

@Karen, I agree planning is the key to just about anything:-)

@Stephanie, I agree!

Aug 16, 2012 01:03 PM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Carla:

The market in most Bay Area cities is crazy.  Multiple offers on homes, little inventory make being a successful buyer difficult.  As you say the rental market is also impossible.  High price for not very nice apartments is the norm.  Your strategy seems to be a good one for our market.  Stressful, true but that may be the only way to do it.

Aug 16, 2012 02:07 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Carla - So many markets are so low in inventory.  I can see how it would make sense to do this if you can qualify for both mortgages.

Aug 16, 2012 02:51 PM
MichelleCherie Carr Crowe .Just Call. 408-252-8900
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

I have to agree with your philosophy on this Karla, I recommend it to most of my clients, too.

Aug 16, 2012 05:01 PM
MichelleCherie Carr Crowe .Just Call. 408-252-8900
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

P.S. Congratulations on the well-deserved featured post, Karla!

Aug 16, 2012 05:02 PM
Mary Stewart
HomeTrust Real Estate, LLC, Homes for Everyone - Wilsonville, OR
Wilsonville and Surrounding Portland Metro Areas

If it can be done and the seller/buyer has the ware-with-all to do it, then it is good.  Not everyone has that ability, but the rent back could be an option if all parties are willing.

Aug 17, 2012 01:10 AM
Stephanie Arnett
Mississippi Magnolia - Starkville, MS
Forbes | Inman | BossBabe | Newsweek | Tom Ferry

I have been having a little luck w/the rent back option for UNDER 30 days.  I agree that it would be EASIER if someone could buy befor selling, but I have met very few that financially could (or should :)

Aug 17, 2012 01:29 AM
Carla Dimond
CATARRA - Mountain View, CA
(Silicon Valley)

@Evelyn, I know it is hard for those who are in the Bay Area to understand this strategy but finding a short term rental is almost impossible right now

@Christine, the qualifying is the hard part

@Michelle, thank you!

@Mary, rent back is a great option

@Steph, if this job was easy what would be the fun???

Aug 17, 2012 07:40 AM