I'D LOVE TO SELL MY HOUSE, BUT I DON'T WANT TO BE HOMELESS

By
Real Estate Agent with Coldwell Banker BRE #01883674

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 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!!

 

 

 

 

Comments (22)

Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

Jayne-Great post covering the many transitional solutions.

Feb 05, 2015 03:08 PM
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Jayne. I think you have done a good job in setting worth options for a seller who is worried about where they will go.

Feb 05, 2015 09:04 PM
Jayne Esposito
Coldwell Banker - Morgan Hill, CA
SRES, GREEN

Michael-it's funny, but we don't really see the seller contingency much here.  But seller rent back is very popular.

Tom- yes, there's always a solution and things always work out!

Pete- thank you!

Sheila-it's all in a days work!

Feb 06, 2015 12:45 AM
Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living

Jayne, this is definitely a very valid question for sellers and one that can give them quite a bit of headache.  Rent back is not a very popular choice in our area but it does occasionally take place.

Feb 07, 2015 11:05 AM
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

Jayne these are issues confronting both buyers and sellers in a seller's market.  This often lead to a delay in closing or the rent back option.

Your post nicely outlined the problems and solutions.

My market is not here yet.

Feb 07, 2015 07:30 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Jayne Esposito 

You did a great job outlining the options to dealing with a tough issue when selling in a strong seller's market. Not sure the issue is as significant here as in your area. You do see some listings where there is a contingency that the seller must find a new home but this isn't real common.

Jeff

Feb 07, 2015 11:43 PM
Jayne Esposito
Coldwell Banker - Morgan Hill, CA
SRES, GREEN

Thanks Jeff!  I guess the housing shortage is one of the hazards of living in the Silicon Valley! 

Feb 08, 2015 01:37 AM
Jayne Esposito
Coldwell Banker - Morgan Hill, CA
SRES, GREEN

Silvia and Jennifer, thanks for commenting.  I'm actually happy for you that your market isn't there.  It's a frenzy, let me tell you.  I have worked in sellers markets before, in other areas and, while competitive, I can't say I've ever seen anything quite like the market here in the Silicon Valley!

Feb 08, 2015 01:42 AM
Rob D. Shepherd
Windermere/lane county - Florence, OR
Principal Broker GRI, SRES

Homeless with money? There are a lot of folks that would trade you problems!

Feb 08, 2015 02:05 AM
Mike Young
203kOnLine.com, covering the USA - Las Vegas, NV
FHA 203k Consultant 916-758-1809

Jayne, such a problem. It isn't kind on your furniture to store it and restore it either. The rent back may be a solution but the buyers are likely anxious to get out of their situation and into their new home. What a quandary.

Feb 09, 2015 10:39 PM
Jayne Esposito
Coldwell Banker - Morgan Hill, CA
SRES, GREEN

Rob-you're not kidding!

Mike-True, buyers would love to get into the house, but they will do what it takes to get the house!

Feb 09, 2015 11:41 PM
Mark Don McInnes, Sandpoint
Sandpoint Realty LLC - Sandpoint, ID
North Idaho Real Estate - 208-255.6227

Silicon Valley is one crazy place.  I watched it affect the whole coast and inland to the Sacramento Valley.  Make it a great Friday the 13th.  Mark

Feb 12, 2015 06:05 PM
Jayne Esposito
Coldwell Banker - Morgan Hill, CA
SRES, GREEN

Thanks, Mark!  And yes, you've got that right!

Feb 13, 2015 12:17 AM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Jayne ... I completely understand your post, staying in Morgan Hill and working on a project in downtown San Jose, homes are very hard to come by around the Bay Area 

Feb 16, 2015 01:47 AM
Jayne Esposito
Coldwell Banker - Morgan Hill, CA
SRES, GREEN

Robert (Vegas Bob) Swetz,  what project are you working on in SJ?  Do you have anything coming up soon?

Feb 16, 2015 01:54 AM
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Jayne, you did a great job of laying out the options.  Most sellers I know would do about anything to be among the second homeless!

Feb 26, 2015 11:57 AM
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

This has always fascinated me....how to buy and sell at the same time and make it all work.  I've managed to do it three times and it always does work out.  One of life's little miracles!

Feb 27, 2015 01:46 AM
Jayne Esposito
Coldwell Banker - Morgan Hill, CA
SRES, GREEN

Thanks Patricia Kennedy!  Sharon Tara, it's a long, bumpy and dramatic road, but yes, somehow it does all work out!

Feb 27, 2015 03:52 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Jayne, this is the market we are experiencing, and we are seeing many contingencies for the Seller to find a replacement home, and rent-backs.

Mar 02, 2015 09:28 PM
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Dallas is experiencing the same issues.    Great idea:   "...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."  Free rent is key!

Jul 19, 2015 03:34 AM