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About Buying a Home Before Selling a House in Sacramento
It is very doable to pursue buying a home before selling a house in Sacramento today.
For some lucky sellers, it is definitely possible to pursue buying a home before selling a house in Sacramento. How one goes about this depends on basically two things: the type of real estate market you’re in and your financial ratios. At the moment, we are experiencing a strong seller’s market in Sacramento. This means sellers are in the driver’s seat. We have low inventory and high numbers of buyers. It’s the principle of supply and demand at work.
Sure, we have buyers who say, my house is so beautiful, it will sell right away, so why can’t I look at buying home before selling? As Sacramento Realtors, we have to bring these buyers into reality. Move them outside of their own situation and get them to look at this through the eyes of the seller. I say to them: Ok, pretend YOU are the seller of this house and YOU have 5 offers. Four of those offers are from buyers who don’t have a house a sell, they have no contingencies. They can get a loan and close right away. And then there is YOU. You who have not even put your home on the market, and you who wants the seller to wait while you get around to it.
If you were the seller, whose offer would you take? The buyer who is ready to go into escrow and doesn’t have a house to sell? Or the buyer who has a contingency to sell her home first and doesn’t have an offer yet? Buyers stare at their feet, shuffle toes in circles. They draw their own conclusion: Um, I guess the other buyer’s offer? Right! So, why do you think the seller will want YOUR offer, an offer that could blow up in their faces? I hate to be the bad news messenger, but there it is.
If you’re thinking about buying a home before selling, you’ve got to see this from the other side to understand.
Now, say you’re in escrow already with a buyer on your house. The seller’s listing agent will want to know if that buyer has removed contingencies. Until that happens, there is no solid commitment. If you’re just gone into escrow, the buyer has by contract default 17 days to change her mind. That’s still an iffy proposition to a seller who has offers from buyers without a home to sell.
We’ve been working with quite a few buyers lately who have had homes to sell but decided in this limited inventory market that they might sell their home without finding another home, which they don’t want to do. They don’t want to be homeless. I don’t blame them. So, for them it makes sense to focus on buying a home before selling a house. Conventional wisdom says to do it the other way around, just so you aren’t tempted to dump your old house for peanuts. Contrary, in a strong seller’s market, the risk of that happening is very low to nonexistent. The hard thing is finding another home to buy. You can leave the sale up to your Sacramento Realtor, a listing agent like Elizabeth Weintraub, who concentrates on sellers and maximizing their bottom-line profit.
If you have good credit and the financial means to carry two mortgages at the same time, you can look into buying a home before selling. Bottom line, all sellers need a place to go. That’s the first question I ask people who are selling. Where will you go? Because if you’ve got no place to go, you’ve got no good reason to sell. This way, sellers are assured they will get the home they want by buying that home first.
Home Buying and Selling at the Same Time in Sacramento
For the past 8 years, the market has been so depressed in Sacramento that it was fairly uncommon to find anyone buying and selling a home at the same time. That’s because many sellers were doing a short sale or had walked away from their homes due to the falling market, while other sellers didn’t have the equity they desired. It was actually the perfect time to sell a home and move up because the move-up price was so much lower back then but people feel uneasy during challenging times and tend to do nothing.
Now that we have a somewhat stabilized market and prices have increased over the past several years, in some areas as much as 40%, there is more movement. Much of it, surprisingly, is in downsizing. Sellers are taking their equity and moving it into a smaller home. But they still need have a plan for home buying and selling at the same time if they don’t want to move twice.
There are many ways to accomplish this task, but the most common way to buy a home contingent on selling an existing home is to use a Contingency of Purchase addendum to the purchase contract. Agents would be wise to thoroughly read and familiarize themselves with this particular document because it has changed, and I’m not kidding you, it is complicated. It is so complicated that recently Sacramento real estate agents argued over its contingency period because it appeared unclear.
The COP by default will allow the seller to keep her home on the market during the contingency period of 17 days. It gives the buyer 17 days to get her home into escrow. If during this time period of 17 days, the seller receives, say, a non-contingent offer, the seller is free to ask the existing buyer to remove the contingency to sell. If the buyer refuses, the seller can give the buyer 3 days and then cancel the buyer so the seller can accept the new offer. It’s a first right of refusal clause for a buyer.
Confused yet? It’s almost an art to engage in home buying and selling at the same time.
Of course, it’s easier for a buyer to first sell her home, put it into escrow, and then look for a home to buy, contingent on her home closing escrow. Or, a buyer can sell her home, close it and rent back for a while as she looks for a new home to buy. Or, a buyer can enter into a long escrow period, say 60 days, to give her plenty of time to buy another home.
However, with limited inventory on the market, the buyers with an existing home who will have the easiest time are those with cash in hand after closing or a loan preapproval letter and no home to sell (or a home she doesn’t need to sell to buy). Yet, it’s not impossible to project a successful outcome for home buying and selling at the same time. You just need to hire a real estate agent who knows how to do it for you. You can call Elizabeth Weintraub at 916.233.6759. I answer my phone.
