Worried about being temporarily without a turf during the time between selling your current home and buying a new one? Here are insights you can use to bridge the gap while taking advantage of today’s sellers’ market.
You’ve probably heard about the shortage of homes for sale at certain price points, specifically those listed for less than $300,000. While this presents a significant upside for many sellers — who may benefit from shorter time on market and increased sales prices — it can also cause some anxiety for sellers who aren’t sure they’ll be able to find an acceptable new home before their current home closes. Don’t worry, sellers have both the advantage and a few creative options they can turn to.
The first is something called a “reverse contingency.” You’ve probably heard the old adage, “necessity is mother of invention,” well, the current tight inventory market is no exception and has given rise to this unique strategy for sellers who are also buyers. How it works is actually pretty simple: Some sellers are inserting a clause into the purchase agreement that makes their home sale contingent on finding another home to buy. This is the opposite of a normal contingency clause that makes a home sale contingent on whether the buyer can sell their home.
So let’s say you receive a very attractive offer on your home, but you haven’t yet found another one to buy. No problem. Simply put in a reverse contingency clause (your REALTOR® can help you) requesting that the buyers wait two weeks to sign the final purchase agreement so that you, the sellers, can find a new home. This will buy you time and keep your very serious buyers and their very attractive offer on the table. Then, if you find a home during that two-week period that suits your needs, you can simply remove the clause and sign the contract. If you don’t find a home during that time? No sweat. You can stay put or negotiate a longer contingency if the buyer is willing. Your Realtor can walk you through the buyer demand for homes like yours and together you can determine if a reverse contingency is the right call for you and your home.
The second option is to arrange short-term or transitional housing, which has become more popular because it allows you to sell in a strong market while taking the time you need to find —or build — your perfect house. Many people report that moving to a short-term residence reduces the worry and stress of rushing into a buying decision. Transitional housing allows you to take your time, do your research and find the perfect home. There are many interim living arrangements and options to consider if your current home sells before you purchase a new property. Depending on the length of your stay and the size of your family, common transitional housing options might include:
- Renting a single family house or townhome with a short-term rental
- Contracting with your buyers to rent your home back from them until your new home is ready for occupancy
- Renting an apartment month-to-month or on short-term rental
- Contracting with an extended stay hotel or inn
- Staying with friends or family who have extra space or a vacant home
When you sell your home before buying a new one, you don’t need to worry about the period of time when you don’t own a home. With a little time, creativity, planning and the right team, you can find the ideal living arrangements for your situation while gaining the flexibility and freedom needed to find your ideal home.
The right team
It’s important to work closely with your Realtor throughout the buying and selling process. Edina Realty agents have helped many people leverage transitional housing or negotiate a reverse contingency. If you’re ready to make your move, reach out today and we’ll put you in touch with an experienced professional. Follow #SellerInsights on Facebook, Instagram, Twitter and YouTube to get more expert advice and insights.