I was told that contingent home sales were more difficult to do these days. I was advised to sell our home, close on it, get the actual cash in the bank and rent while shopping for a new home. That we should avoid with having to get the timing of the sales synchronized. I was also told that these days more people put offers on homes and then aren’t able to close on them because they can’t get the financing they hoped for. I talked to my own mortgage company and they said they won’t even process a home loan unless there is at least 20% down. So credit seems to still be tight. We also want to avoid having to carry two mortgages because I think as the months ago by, the pressure will be to accept a low-ball price on the old home just to sell it.
So the plan is to sell the home, then rent until we find a home to put an offer on and after closing move into the new home. What I don’t like about this plan is having to move twice, but I was thinking of putting most stuff we don’t need while renting in storage (or just sell it) and then re-think the decor and what we need in the new home. We also feel the pressure would be off in buying the new home that we can take our time shopping for it without feeling like we must find a home immediately.
I wanted to hear from people their current experiences in selling their homes and if had troubles with getting it to close currently, and if they are also selling and then renting while shopping for a new home.
We did that. We moved out of state and sold our home, while renting in our new town. It gave us time to explore our new place to figure out what neighborhoods we liked. We put most of our things in storage to avoid setting everything up and then packing again. It was a drag moving twice and feeling unsettled, but for us it was the best option.
We just sold our house and bought another. I told the realtor I didn’t want an offer contingent upon the sale of another home, and she said she hadnt written one of those in years. Both offers we got were cash, which just means they weren’t contingent on financing.
We bought the house we live in now without any contingencies other than an inspection, so we had two houses for about two months. The first house hadn’t sold when we bought the second, but we were ready to move and would have left the other house vacant. Luckily we only had two houses for two months.
Fifteen years ago when we bought the house we just sold we sold the old house first, rented, then bought again, and we did that in 1983, too. It’s nice to know how much you actually have before you buy again.
I definitely think that if you are moving out of place you are familiar with you will be well served by a least a few months of scoping out the neighborhoods to get a good feel of what you like and what you get with respect to what you pay.
We had spent the previous year (my husband relocated before I did) picking what town we wanted to move to and checking it out. The rental was mostly to not have to deal with a buy/sell situation, especially long distance. Getting to know the town even better was a nice extra benefit.
My brother recently sold his home and bought a new one at the same time. The way they did it was to sell their current home and purchase a new home before they closed on the sale. This can be stressful though. I don’t think they had any problem securing financing for the new home but, of course, the timing makes it necessary to buy a new home in a couple of months. They didn’t have the luxury of time to shop until they found their dream house.
We knew we would be moving out of state for work but didn’t know where to nor exactly when other than sometime within the next couple of years. So we put the old house on the market and it sold before the transfer came through. We then rented in the old town. Then when the job transfer came through we house-hunted in the new city, bought, and moved the second time.
15 years previously we’d bought before selling and ended up with two houses for 2 years. This was back pre-crash when credit was easy & cheap and the real estate market was still good & still going up.
Having done it both ways I can vouch that the “simplicity” of only moving households once is far outweighed by the cost and complexity of owning a vacant house for any significant length of time.
Something else to consider …
Each move is a *great *opportunity to reduce and simplify. In the recent moves we spent the time in the rental seriously rethinking everything we owned and jettisoning a huge amount of stuff we were holding onto simply because previously we’d had the room to do so. Not buying too much house in the new city simply as a warehouse for unneeded goods was a massive benefit.
Craig’slisting unneeded furniture for 10 cents on the dollar versus what you paid for it seems like a painful waste. Until you consider the $1000 you’re not spending *every single month *on additional mortgage to store that stuff tastefully arranged in excess rooms.
Having once bought a new home before selling the old one left us in the position of owning two homes for nine months and taking a way-to-low bid on the old place.
Similarly, I’ve bought a new place before selling the old one. It meant that I was under a lot of pressure to unload the old place – not a good position to be in when negotiating a sale price.
But to sell first and rent, then buy again – well, moving twice is a pain in the derriere, too. In the area I live, landlords want a one-year lease, so renting before you buy the new place is another commitment.
Of course, real estate agents I’ve consulted are on both sides. The ones interested in helping me sell are telling me to sell first so that I know how much cash I’ll have. The ones who want to help me buy say that it’s better to buy first so that you’ve got a place to move to.
I have always felt that having two closings puts you more at risk for shenanigans by your buyer (“the leaves aren’t raked. I want $5000.00 off”). You need to be able to tell your buyer to walk.
BTW, When I sold my parent’s condo, I got two offers, one from someone who wanted the contract contingent on their sale and one that did not. The contingent one was higher so I told them that if they removed the contingency they could have it. It was my understanding that if they did not sell they would need to take a bridge loan or forfeit the down payment (10%). After the sale went thru, my lawyer informed me that it really did not matter, since it was still contingent on financing and if they did not sell they would not have qualified for financing, allowing them to walk away. I have always felt that my lawyer simply did not structure the contract properly (I am in New Jersey), but I don’t really know.
Depending on the market, you can sometimes do a rent-back on the old place - that’s reasonable only if you have a pretty good sense that the deal will go through, and you can close on your new place quickly.
It’s what we did when we moved: we started shopping for a new place as soon as we had a contract on the old, and we had a clause in the sale contract that we could rent back for up to 60 days (the buyer had another place to live so it worked out).
In fact the seller of our new place rented back from us for a few days.
We had about a 75 day difference between the closing on our old house and closing on our new one.
It went fairly smoothly but the one of the bigger challenges was finding something to rent with such a short term. Even places advertising “short term leases” were still at least 3 months. I think we ended up paying 3 months for an apartment we stayed in for 1.5 months.
The easier thing to deal with was moving. We used 1-800-PACKRATS which is just like PODS in conjunction with a mover which was paid by the hour. We stationed ourselves in the driveway and directed the movers which stuff to put in the pod and which stuff to take to the apartment which we kept very minimal.
PACKRATS/PODS just charge for the initial pick-up and final drop of the pod and if you want them to store the pod for you in-between it’s pretty cheap.
When the movers came again 75 days later to move us out of the apartment and into our house we arranged for the pod to be there and had them move some of the bigger stuff out of it into our house.
Since a lot of the pod loading and unloading we did ourselves on our own time schedule and the apartment stuff we kept to a minimum we didn’t use the movers more than a few hours on both moving days.
In October 2004, we put a deposit down on a new house to be built by a developer. The new house was supposed to be completed in June 2005, so we had about 8 months to prepare. I spent late fall doing some repairs and painting on the old house, and put some of our excess stuff in storage. We put the old house on the market in March-April 2005, and applied for a mortgage on the new house about the same time.
Fortunately the mortgage on the new house was approved without it being contingent on the sale of the old house. We closed on the new house on June 15, and set the closing date for the old house at June 30, which gave us two weeks to move.
Fortunately it all worked out – I would hate having to move twice. If I had to do that, I’d probably just use a moving company and have them hold everything in storage, and stay in an extended-stay hotel for a few weeks.
That can be a killer. Especially in my area where rental housing comes at a premium and there is a lot of competition for quality units at semi-reasonably prices. A friend of mine went through this a little ago and was starting to panic near the end of his 30 day escrow. He found a place on day 28 and moved in a rush.
After seeing that I took a chance and went the other direction. Since I was always very unsure if I’d have the capital to buy again after I sold, I got a rental first then set a sale date for the realtor. Moved out, fixed up the place for sale( paint, staging, floors refinished - all much easier with you out of the house )and got lucky and sold in just a few days. I ended up double-paying rent + mortgage for ~two months, but it was worth it for the peace of mind.
But it can easily bite you in the ass if the home doesn’t sell right away. I guessed right I’d be okay, but it is always a crap-shoot.
I would never have considered moving twice. The most I would do was put our furniture in storage and have a short-term furnished rental, perhaps in an apartment-hotel I know downtown. Cramped, but we could put up with it for a couple months and the rental period is for whatever you want.
But I don’t understand. When we recently sold our house, it was not considered sold until the financing had been approved. The agent left the sale sign and we could have considered other offers until it was finalized. At that point, the buyer was committed. Our buyers waived inspection, but it would also have been contingent on that. Meantime we had already bought a condo, borrowing the money from our son.
Our last move worked out extremely well - when we sold our place in Florida, the buyers let us rent it back for a few months. My husband was already in Maryland, living on our boat. My work was paying for the move, and it included a few months of storage. When our daughter graduated from high school, I transferred, and we lived on the boat and looked at a LOT of places over 2 months.
We found our house at the end of June and were able to move in at the end of July. The sellers left some furniture behind (they were downsizing) so we had a bed, a table and chairs, and a couch, so we could move off the boat before our stuff we delivered.
Probably depends where you live. I’m in the San Francisco bay area. You are moved out of your house before it hits the market, and they stage it with much nicer furniture than yours and then you look at it and want to move back in. You have to make the decision on where to live next before you even have your house on the market.
My last two moves, I used a different strategy: I bought a new place, and immediately put the old place on the rental market. Both times I had a lease signed before I moved out. (I carefully scheduled to coincide with the traditional lease-turnover dates for the neighborhood.) I still own them all, and the inflation in the years to follow made them cash-flow positive.
There is a loan product called a “purchase money mortgage”. Could be a first mortgage, but in this case we’d be talking about a purchase money second mortgage. You borrow a sum against the equity of your first house, use it for the down payment of the new house, pay off the PMSM when you sell your old house.
I haven’t actually done this. I just found the product today after wondering for years why something like this doesn’t exist. I expect there’s some extra cost in terms of interest rate and fees, but I expect it’s comparable to the hassle of moving house multiple times, paying rent for a year, or getting squeezed in a contingency chain.
