Making sure you have a place to go after selling in a seller's market

Q:  I hear the market is great right now to sell - I want to downsize anyway and if I sell now, it would be great to maximize the profit on my house. Though on the flip side, I also hear it's really tough to buy - a lot of competition! What if I sell right away and can’t get a new place in time before my closing?

A: First things first, don't worry about being homeless! As the seller, you always have the power to negotiate the terms of your sale. If you have a buyer lined up for your current home before you've found another home to buy, we recommend two options.

One option would be to specify in your Purchase & Sales Agreement that the sale is contingent upon you finding suitable housing. The time period granted would be something negotiated with the buyer. If you are still unable to find a home to purchase in that time, you and your buyer can either extend the deadline or cancel the contract.

Another desirable option is called a 'rent-back' provision. This is another negotiation you would counter to buyers' offers. This option allows the sale to go through, however the new owners would allow you to 'rent' the home for an agreed upon time. The amount of rent could be determined by mortgage payments or current market value of similar properties. This option typically is more agreeable for buyers as it assures them ownership, even if it means they wouldn't gain possession for a few months. Also it's a benefit for you as you are in a stronger position to make offers on your new home without any sales contingencies. As you can imagine, most sellers would prefer a cash offer, or one that doesn’t have a contingency of a house to sell first.