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.
