Best strategy for selling & moving up?

[socal78]

Scenario: You currently own a home. You want to sell and buy a more expensive home. You need the equity from your current home to do it. In what order do you do it?

A) Make offers contingent on the sale of your current home. Juggle 2 escrows at once.
Pro: You can take your time picking out your next house. Only 1 move required.
Con: Having that contingency in this market may not fly. What if either escrow falls through.

B) List your home. Wait until it goes into escrow before finding a new home.
Pro: You have a better idea how much you'll gain from the sale.
Con: Rushed into picking your next home, possibly settling into something you don't like so you're not homeless.

C) Sell. Rent back. (Edit: Lease the house back from the new owner.) Use that time and your newfound cash to plot your next move.

D) Take out a bridge loan equal to the amount of your home equity. Use it to make offers before you sell.?? <--- I don't know if lenders these days still offer these.

All of these scenarios kind of terrify me. I don't like the stress of having more than 1 ball up in the air to juggle. Last time I put a rental in between selling and buying to make it less stressful. It works out great especially when it comes to making offers. But it might be nice not to do 2 moves.

My parents did Option B. It was a terrible experience for them. They were rushed to find their next home. Ended up having to pick a place they didn't like and couldn't agree on just because time ran out.

I'd love to know what you guys think is the easiest way to go.

 

[homer_simpson]

Buy your home and then sell your home.

 

[sgip]

Bridge loans are as easy to find as a Jackalope. Only one company I know of (Bank of Internet) does them and the terms are rough.

Non-contingency, quick closing, cash flushed buyers are the ones winning the bids today. You could make a 50% down offer but close with a 20% down financed purchase providing that you can show the 50% down.

If this was me, and if I had 20% down, I'd go in non-contingent - assuming I could also show that I can qualify with both house payments. Don't have a rich Uncle who could temporarily gift the $$$ required to make an all cash offer, but if I did that would be my other choice.

 

[cubiczirconia]

Scenario: You currently own a home. You want to sell and buy a more expensive home. You need the equity from your current home to do it. In what order do you do it?

A) Make offers contingent on the sale of your current home. Juggle 2 escrows at once.
Pro: You can take your time picking out your next house. Only 1 move required.
Con: Having that contingency in this market may not fly. What if either escrow falls through.

B) List your home. Wait until it goes into escrow before finding a new home.
Pro: You have a better idea how much you'll gain from the sale.
Con: Rushed into picking your next home, possibly settling into something you don't like so you're not homeless.

C) Sell. Rent back. Use that time and your newfound cash to plot your next move.

D) Take out a bridge loan equal to the amount of your home equity. Use it to make offers before you sell.?? <--- I don't know if lenders these days still offer these.

All of these scenarios kind of terrify me. I don't like the stress of having more than 1 ball up in the air to juggle. Last time I put a rental in between selling and buying to make it less stressful. It works out great especially when it comes to making offers. But it might be nice not to do 2 moves.

My parents did Option B. It was a terrible experience for them. They were rushed to find their next home. Ended up having to pick a place they didn't like and couldn't agree on just because time ran out.

I'd love to know what you guys think is the easiest way to go.

We went with C. Sold the house, kept the cash for a couple of years, waited for the market to crash a bit, bought.
You know, the best strategy is not be comfortable in the house you live in- nothing moves you up faster than that ;-) Finding it increasingly difficult to get out of the current house..

 

[usctrojancpa]

The way that the market is...the seller calls the shots.  You can sell your property contingent upon you buying your new home.  Basically once the buyer removes contingencies then we are no longer a contingent buyer on your end.  If you can do a sale leaseback that would work great too and many buyers would be open to that as well (especially investors). 

 

[nosuchreality]

Heloc your equity out, buy your new place and then sell the old place.  Provided you can qualify.

Bird in hand, way to hard to buy a house, let alone one you want so don't let the current one go unless you absolute hate it and would prefer the vagaries of renting.

 

[jayl23]

Buy your new home and then sell your old home.

Agreed... 

 

[irvinehomeowner]

People who are in this situation usually do A but timing and market conditions may not allow it. This works better with new construction (although not sure now).

B would work, but with such low inventory, you may not have enough time to find a home you like (and new construction takes a while).

We did C but had to live with my parents for a month or two.

I am considering C again... but not the living with my parents part... maybe rent for a while but then that's two moves... although we don't plan to keep half our furniture.

HELOCs don't work very well with stricter lending standards.

 

[socal78]

Note: On Option C, where I said "rent back", I meant do a lease back of your own home from the new owner. That way there is only 1 move involved.

 

[socal78]

Buy your home and then sell your home.

Okay, but if you needed the equity from the sale of your home, then how would it work? Details? Or are you saying just wait until the equity that's tied up is not needed?

 

[socal78]

You can sell your property contingent upon you selling yours.

I'm not sure I understand. Can you rephrase, please? I think I might know what you're saying but one of my concerns would be a tip I got from an agent once who said that the longer an escrow period is, the less likely it is to close. I like 30 day escrows... strike while the iron is hot. Thoughts??

 

[irvinehomeowner]

Note: On Option C, where I said "rent back", I meant do a lease back of your own home from the new owner. That way there is only 1 move involved.

Not all buyers will do rent backs though... some may be in the same situation you are and want to move in ASAP. Also, the rent might be higher than what you were used to paying in mortgage depending on how the buyer's financed.

We rented back our last home for a month and it was more than what we paid in mortgage (a little irritating paying higher rent for your old home that you no longer own).

The other worry (and reluctance to rent back) on the buyer side, is what is the duration of the rent back and what if something breaks in the home while they are renting.

 

[usctrojancpa]

You can sell your property contingent upon you selling yours.

I'm not sure I understand. Can you rephrase, please? I think I might know what you're saying but one of my concerns would be a tip I got from an agent once who said that the longer an escrow period is, the less likely it is to close. I like 30 day escrows... strike while the iron is hot. Thoughts??

Opps, "upon you buying your new home."  That's where it is important that the buyers sign the contingency removal form which will effectively release their deposit.  If you have a strong buyer (all cash or a high downpayment, the changes of it dropping out are slim to none...especially if prices continue to grind higher).

 

[cubiczirconia]

Note: On Option C, where I said "rent back", I meant do a lease back of your own home from the new owner. That way there is only 1 move involved.

Then I didn't do Option C. Between selling and buying, there were good 2.5 years.

 

[socal78]

Note: On Option C, where I said "rent back", I meant do a lease back of your own home from the new owner. That way there is only 1 move involved.

Not all buyers will do rent backs though... some may be in the same situation you are and want to move in ASAP. Also, the rent might be higher than what you were used to paying in mortgage depending on how the buyer's financed.

We rented back our last home for a month and it was more than what we paid in mortgage (a little irritating paying higher rent for your old home that you no longer own).

The other worry (and reluctance to rent back) on the buyer side, is what is the duration of the rent back and what if something breaks in the home while they are renting.

In 2003 when things were taking off, the sellers I bought from wanted to rent back but felt the same as you... even though home values were beginning to skyrocket, they didn't want to pay a dime more per month than they were paying when they owned even though the carrying costs had increased significantly from when they bought. The solution was simple. Since it was a seller's market, it was all part of the negotiatons. In order to get the house, I agreed to extend their lease at their original rate and "eat the difference" for a period of 3 months. At that time, you had to do whatever it took to get the house kinda like now. That's why I have lease back on the brain.

 

[usctrojancpa]

Note: On Option C, where I said "rent back", I meant do a lease back of your own home from the new owner. That way there is only 1 move involved.

Not all buyers will do rent backs though... some may be in the same situation you are and want to move in ASAP. Also, the rent might be higher than what you were used to paying in mortgage depending on how the buyer's financed.

We rented back our last home for a month and it was more than what we paid in mortgage (a little irritating paying higher rent for your old home that you no longer own).

The other worry (and reluctance to rent back) on the buyer side, is what is the duration of the rent back and what if something breaks in the home while they are renting.

In 2003 when things were taking off, the sellers I bought from wanted to rent back but felt the same as you... even though home values were beginning to skyrocket, they didn't want to pay a dime more per month than they were paying when they owned even though the carrying costs had increased significantly from when they bought. The solution was simple. Since it was a seller's market, it was all part of the negotiatons. In order to get the house, I agreed to extend their lease at their original rate and "eat the difference" for a period of 3 months. At that time, you had to do whatever it took to get the house kinda like now. That's why I have lease back on the brain.

Keep in mind that there are a lot of investors out there right now so one of those buyers would be more than happy to have you do a rentback as long as you wanted.

 

[socal78]

You can sell your property contingent upon you selling yours.

I'm not sure I understand. Can you rephrase, please? I think I might know what you're saying but one of my concerns would be a tip I got from an agent once who said that the longer an escrow period is, the less likely it is to close. I like 30 day escrows... strike while the iron is hot. Thoughts??

Opps, "upon you buying your new home."  That's where it is important that the buyers sign the contingency removal form which will effectively release their deposit.  If you have a strong buyer (all cash or a high downpayment, the changes of it dropping out are slim to none...especially if prices continue to grind higher).

What you said about prices continuing to grind higher is another good point. On a *different blog not to be mentioned by name but known to everyone here* that blogger pointed out recently how he has a home seller reluctant to sell because he is not confidant he'll be able to repurchase. I see the scenario I posted being a common issue. As a homeowner, I wouldn't want to sell unless I was sure I could purchase another home. But if my connecting train leaves the station too soon, I'm stranded! If you're not an FCB, that's a problem.

 

[socal78]

Non-contingency, quick closing, cash flushed buyers are the ones winning the bids today.

Outside of Irvine, though? Does the price range matter?

Thank you for your post, btw. I was looking forward to your input. Good to know about the elusive Jackelope!

 

[usctrojancpa]

Non-contingency, quick closing, cash flushed buyers are the ones winning the bids today.

Outside of Irvine, though? Does the price range matter?

Thank you for your post, btw. I was looking forward to your input. Good to know about the elusive Jackelope!

Yup, even outside of Irvine.  I had 4 offers (out of eight) on that Aliso condo that I sold last Oct that were 50%+ down buyers. 

 

[socal78]

Non-contingency, quick closing, cash flushed buyers are the ones winning the bids today.

Outside of Irvine, though? Does the price range matter?

Thank you for your post, btw. I was looking forward to your input. Good to know about the elusive Jackelope!

Yup, even outside of Irvine.  I had 4 offers (out of eight) on that Aliso condo that I sold last Oct that were 50%+ down buyers. 

What about price range? Do you see the # of investors being phased out at all at upward levels or type of housing i.e. SFR vs. condo?