Many markets across the country are in a sellers' markets, and here in the Silicon Valley we have been in a sellers' market for the past 3 years. Low inventory and high demand have pushed prices up, making this an ideal time for homeowners to sell. But for those who do not have a second home, the question becomes, "But where do I go?" This is a fair question, because there are many more buyers than there are homes for sale. And if you need to sell your current home to buy the next home, things become tricky. But have no fear...there are alternatives that can help make a win-win situation for everyone involved. Here are a few:
Seller Rent-Back: In this situation close of escrow takes place as scheduled, but buyers do not take immediate possession. Instead, sellers remain in the house for a specified time period (usually up to 60 days) designed to look for and purchase a new home with the proceeds from the other house. This is a common practice in Santa Clara County in our current market, and in fact has become a negotiation tool for buyers who are competing in a multiple offer situation. The buyers can approach this in a few ways. They can allow the sellers to stay in the house for an agreed upon time period and pay the buyers' new mortgage payment, which of course has potential to be much higher than the sellers' current mortgage payment. Or, buyers may agree to allow sellers to pay the amount of the sellers' current mortgage payment, while the buyers make up the difference. And finally, buyers may offer FREE rent for the agreed time period, where the buyers start paying their mortgage in full while the sellers remain in the house. This really sweetens the deal, as they say, and causes the buyers to stand out when there are multiple offers.
Seller Contingency: Sellers may, as part of the Purchase Contract, state that they will sell their home contingent upon sellers finding a replacement home for them to purchase. It is important to know that this contingency is based on the seller "entering a contract to acquire a replacement property", and is not based on closing escrow. Therefore, it would be wise to keep that contingency in place until you have satisfied and removed contingencies on you purchase. Otherwise sellers may find themselves obligated to sell even if their purchase property falls through.
Renting: While the idea of moving twice and putting your belongings in storage may not seem very appealing, it does have its benefits. Temporarily renting can take off pressure and allows you to take your time to search for a new home, and the right home. In addition, it presents the opportunity to wait until the market changes, avoiding bidding wars and overpaying.
There are also lending options, such as bridge loans if you qualify. Please contact me if you live in Los Gatos, or anywhere in Santa Clara County, and would like the name of a lender who can discuss loan options with you. Likewise, if you are interested in taking advantage of this hot sellers' market, I would be happy to provide a FREE market analysis and discuss your needs and concerns, as well as advise you on what you need to do to prepare. And don't worry...you won't be homeless!!