Selling your home before you have a new one

[Mdlerth]

It turns out Catullus was a loan officer at First National Bank of Verona

We accepted an offer for our asking price within a few days, from the first couple who looked at the house. Problem was, it took an entire 30 days to find out that the mortgage company that pre-qualified them turned them down twice for a mortgage due to various credit issues each of them had. (Our agent told their agent upfront that their pre-qualification letter meant nothing. Turns out he was right.)

A great example of how much I don't understand the lending industry. Why would one bother securing the pre-qualification if it is written only in wind and swiftly flowing water?

 

[gwraigty]

It would be a very rare buyer that is going to let the seller stay in the property after a sale. Moves are disruptive and they want to get it over with. If I were such a buyer the rent I would charge the seller would be "highly motivating".

It depends entirely on your parents finances and their local housing market as to if they can afford to overlap. Also consider the stress/disruption of always keeping the house "show room ready" and having to leave at a moments notice for a showing.

It also depends on the buyer's situation. If they're committed to being out of their current situation in 30 days or so, then the buyer can't agree to not move into their new home for a period of a few months. Maybe the roadblock is because the OP's parents are wanting multiple months to stay without having another definite place to go with a definite end date.

In our case, neither of our buyers were in desperate need of moving in immediately. The rent we paid was about 250% of what the mortgage had been. Yes, it is definitely designed to be highly motivating and I can understand why. I didn't think it unfair.

I've heard of this business of vacating for a showing. We never did and we were never asked to.

 

[gwraigty]

A great example of how much I don't understand the lending industry. Why would one bother securing the pre-qualification if it is written only in wind and swiftly flowing water?

No idea. It was meant to make us believe that the buyers were guaranteed to get a mortgage from that company. They may have thought so also, since they didn't try a different company after being turned down the first time. Oddly, they were able to buy a similarly priced house a couple of blocks away using a different mortgage company.

 

[W2R]

My parents have narrowed down their "next home" choices to two neighborhoods, but have yet to find the ideal lot/house come available. But over the past 60+ days, the right houses haven't come available.

They decided to sell first, then buy. They were hoping for a buyer who can be flexible with either allowing 60 days or allowing them to short-term rental the place back for a few months. They got offers with none of that (30 days to close) from the first few buyers, turned them down, and their RE agent is getting a little annoyed. They could sell and rent somewhere for a few months, but they aren't fond of that idea, including moving twice.

Now they are thinking, find the new place first, then sell. (they don't want to sell investments or get a mortgage at 75). I'm concerned about the stress on them for both approaches. Mom is a bit high strung, Dad internalizes her stress...they are great fun at parties!

I'm starting to think the "sell first, rent somewhere and wait" might not be good for them given their age and personalities... but then "buy, then hope we sell" also means they might lose the perfect house (and deposit, but that's cheaper than renting+storage).

Anyone with direct experience with either - getting stuck between sales is the issue that is keeping them up at night...literally.

(Emphasis mine). Yes, you should be concerned about the stress, both mental and physical! Good thinking. It is definitely hard on older people to move. I moved in 2015 and here are my thoughts on the experience:

I made a full price cash offer on my Dream Home (that was accepted) the day it came on the market, before selling my old house, because I had to jump on it or it would have been bought out from under me.

Even at the "youthful" age of 67, and even though I owned both houses at the time of the move, still I tried to do too much and that was not good for my health. You know how older men sometimes think they can play basketball or baseball with a group of coworkers in their early 20's, and end up overdoing and injuring themselves? I was the same way about packing for the move; I was so sure I could do it. Hey, it doesn't look THAT hard, I thought, I have moved a million times. Also I was going to the gym and lifting literally tons of weight there, so I felt more capable than other seniors. So I did not use common sense and had serious adverse effects from overdoing. From what I gather, this happens more often than not with older people.

I waited until after I moved, put my old house on the market, and sold it in four days. Sounds ideal, but it was harder on me than it sounds.

If I ever have to move again, especially if moving into a rental and then moving a second time into the new house, here's what I would do if I were them:

I'd not pack ONE THING other than one or possibly two suitcases. I'd rent a fully furnished apartment, or even better stay in an Extended Stay place (probably the latter). I'd pay the movers to pack up everything else, and put it in storage while I was renting.

That's what I would do. And if they were my parents, I would insist on it and try to figure out a way to get them to cooperate with taking it easy during the move.

 

[brucethebroker]

First of all, forget the "rent back option". In our area, Realtors (myself included) and many Attys. advise against it. The new buyer owns a house, insures a house and assumes the house will be returned in the condition it was when purchased. Good luck with that. Personally, I would not take a listing with those conditions from the seller.

Which is more important to your folks? Getting the right home, at the right price? Or having the security of a sold home before making an offer on a new home? (maybe find a new home quickly, maybe not.) It is extremely difficult to have both. With your HELOC suggestion, they can look for the best home, at the best price without contingencies on their offer. Of course, the sale of their home may not go as well as planned. But personally, this is the solution I use and recommend to my clients.

 

[gwraigty]

First of all, forget the "rent back option". In our area, Realtors (myself included) and many Attys. advise against it. The new buyer owns a house, insures a house and assumes the house will be returned in the condition it was when purchased. Good luck with that. Personally, I would not take a listing with those conditions from the seller.

Why would someone renting back the house they just sold trash the house after ownership changed? In the month we rented back while waiting for our new construction to be finished, we treated the house with care, same as when we owned it.

 

[Original Wally]

A moving service like PODS can help with the move. You load (or have them loaded) and they store the containers until you call to have them delivered. Your parents could consider a fully furnished place for a couple of months while they look . This gets you down to one move.

That is what we are thinking too. DETEST the thought of two moves. PODS and a furnished apt. sound like a better solution.



We are in the "fix up the existing house" phase. BUT we will also be gone for two months on vacation. Gosh, retired live is difficult!

 

[Doribe]

I would be much less stressed selling first and taking my time buying while renting a month-to-month place. I plan to do this next year. This year I want to focus on getting my home of 26 years ready to go on the market. I want to move to a condo and I want to take my time educating myself about all things condo and possible locations before I make a major commitment. I may decide that renting is better for me.

 

[pb4uski]

They need to be careful... technically, if the real estate agent brings them a ready, willing and able buyer who will pay full price without any contingencies and they refuse to contract then they could still owe the agent the commission since the agent did their job... that said, it is rarely enforced in practice to my knowledge. See https://www.trulia.com/voices/Home_Selling/If_a_realtor_brings_me_a_buyer_who_is_ready_will-144146 https://www.chicagotribune.com/news/ct-xpm-1987-06-13-8702130723-story.html

What about sell, put most belongings in storage and travel and/or live in furnished temporary housing until the place they move to is ready to minimize the hassle of moving twice?

Or they could make offers for place that are contingent on them selling their home. It would put them at a disadvantage to buyers without such a contingency... but they could offer to allow the seller to continue to market the property and if they get a similar or better offer then you folks have 24 hours to decide whether to waive the sale contingency or walk away and start anew.

If their investments are taxable accounts, they may be able to use them to collateralize a loan to bridge them until thier house is sold.

 

[Bir48die]

I think they should do the buy first, using a HELOC or bridge loan. It sounds as their house will sell pretty fast, so the small time of paying interest will result in a low cost. Benefit is the one move. It also allows them time to find the house that is what they want and not having to settle or compromise on new house they buy.


The other option is to put stuff in storage, or the PODS or similar, and just live in an extended stay furnished hotel or apt for a while. I think this option is less desirable to your parents as it will seem like moving twice.

The HELOC thing works if you don't tell the, what you're using the money for. When we mentioned using money to buy a new house our credit union pulled the deal. We bought our new house then used portfolio to borrow money at 1% over LIBOR. Luckily bought in February 2013 when things were a little soft. By May when we sold our house the market was hot. Actually let the prior owner rent free for two months.

 

[brucethebroker]

Why would someone renting back the house they just sold trash the house after ownership changed? In the month we rented ba ck while waiting for our new construction to be finished, we treated the house with care, same as when we owned it.

A few things:
1. No mention of "trashing" a house in my response.
2. Paint can be scratched, door jams chipped, carpets snagged and other "unintentional damage" can be done from the move out. Minor? Maybe, but still frustrating to the new owners.
3. What if the stove/refrigerator/water softener goes out during the "rental" stage? What if the "renters" are not out by the move out day? What if they leave the home dirty? Who needs those hassles just to appease sellers who don't want the work of moving twice?
4. Not everyone who rents is as careful as you are. I am a landlord. I know.

I recommend buyers do a final walk through of their newly purchased home on the way to closing. And the home must be vacant at the walk through/closing, no 3-5 days to move out for ex-owners. (This advice came from an attorney, BTW). That way, buyers can verify that the home is STILL in the condition it was when they made the offer (if not-it is worked out before the papers are signed). Can't do that if the sellers are renting for a couple of more months.

Of course, the sellers could give a large damage deposit to remain in the house. But why should buyers take that hassle and the risk that goes with it? Don't take my word for it. Check with your attorney before agreeing to a rent back provision in the purchase agreement and have the lease papers drawn up. If he/she agrees, go for it.

 

[brucethebroker]

I would be much less stressed selling first and taking my time buying while renting a month-to-month place. I plan to do this next year. This year I want to focus on getting my home of 26 years ready to go on the market. I want to move to a condo and I want to take my time educating myself about all things condo and possible locations before I make a major commitment. I may decide that renting is better for me.

Great planning!

 

[PoorOldCountryBoy]

Sell first definitely a better approach unless they are still somehow attached emotionally to the old place. If they are not *SURE* they want to sell, then hold on to it if the budget allows it.

 

[gwraigty]

A few things:
1. No mention of "trashing" a house in my response.
2. Paint can be scratched, door jams chipped, carpets snagged and other "unintentional damage" can be done from the move out. Minor? Maybe, but still frustrating to the new owners.
3. What if the stove/refrigerator/water softener goes out during the "rental" stage? What if the "renters" are not out by the move out day? What if they leave the home dirty? Who needs those hassles just to appease sellers who don't want the work of moving twice?
4. Not everyone who rents is as careful as you are. I am a landlord. I know.

I recommend buyers do a final walk through of their newly purchased home on the way to closing. And the home must be vacant at the walk through/closing, no 3-5 days to move out for ex-owners. (This advice came from an attorney, BTW). That way, buyers can verify that the home is STILL in the condition it was when they made the offer (if not-it is worked out before the papers are signed). Can't do that if the sellers are renting for a couple of more months.

Of course, the sellers could give a large damage deposit to remain in the house. But why should buyers take that hassle and the risk that goes with it? Don't take my word for it. Check with your attorney before agreeing to a rent back provision in the purchase agreement and have the lease papers drawn up. If he/she agrees, go for it.

Our experience was nothing like what you describe. Maybe we and our buyers had incompetent agents?

 

[Scuba]

(Emphasis mine). Yes, you should be concerned about the stress, both mental and physical! Good thinking. It is definitely hard on older people to move. I moved in 2015 and here are my thoughts on the experience:

I made a full price cash offer on my Dream Home (that was accepted) the day it came on the market, before selling my old house, because I had to jump on it or it would have been bought out from under me.

Even at the "youthful" age of 67, and even though I owned both houses at the time of the move, still I tried to do too much and that was not good for my health. You know how older men sometimes think they can play basketball or baseball with a group of coworkers in their early 20's, and end up overdoing and injuring themselves? I was the same way about packing for the move; I was so sure I could do it. Hey, it doesn't look THAT hard, I thought, I have moved a million times. Also I was going to the gym and lifting literally tons of weight there, so I felt more capable than other seniors. So I did not use common sense and had serious adverse effects from overdoing. From what I gather, this happens more often than not with older people.

I waited until after I moved, put my old house on the market, and sold it in four days. Sounds ideal, but it was harder on me than it sounds.

If I ever have to move again, especially if moving into a rental and then moving a second time into the new house, here's what I would do if I were them:

I'd not pack ONE THING other than one or possibly two suitcases. I'd rent a fully furnished apartment, or even better stay in an Extended Stay place (probably the latter). I'd pay the movers to pack up everything else, and put it in storage while I was renting.

That's what I would do. And if they were my parents, I would insist on it and try to figure out a way to get them to cooperate with taking it easy during the move.

Excellent advice!

 

[Aerides]

Just to tie a bow on this now it's all over: Yes as noted my biggest concern was age + stress. My parents are about 75, so the burden of moving twice, renting, waiting and hoping, was my biggest concern. I expressed that to them and made other suggestions, but they stayed with the plan:

They got a very good offer at the end of Feb (asking price -10k, cash buyers who were fine to contract with 60 days till closing, as they were moving down from up north.
Days later, they found the PERFECT house for them, made an offer and it was accepted, but the sellers didn't like the idea of having to wait 60 days or that my parents wanted to buy contingent on their sale going thru (oi - yeah I don't recommend that...). Parents were stuck on "that's how we always did it before" - despite my reminders that before was 40 years ago in a different country...The sellers required the ability to entertain back up offers, but fortunately, none came along.

Parents closed on both (their sale and buy) yesterday, moved out and in, and woke up in their new home this morning, which was exactly the way they hoped it would all work out.

I still think they were nuts, and they got very lucky that everything fell into place.

 

[LARS]

I would be much less stressed selling first and taking my time buying while renting a month-to-month place. I plan to do this next year. This year I want to focus on getting my home of 26 years ready to go on the market. I want to move to a condo and I want to take my time educating myself about all things condo and possible locations before I make a major commitment. I may decide that renting is better for me.

Ditto. Only way to go in my mind.

 

[albireo13]

That's our plan.
We have sold our house, with the closing the end of June
Haven't found our new house yet so, it looks like we will be renting.
It's hard to find a decent rental though that doesn't want a year lease.

 

[Rianne]

In 2012, we sold our house in MI. Had about 60 days (waiting for closing and requested extra time in our house) to secure movers, set up Salvation Army to load all the extra furniture for our downsize. They backed a truck in and we donated so much furniture. It was tense and ran around Champaign (new location) like crazy people, trying to find a house we liked to buy. Did not want to rent or store anything. We totally lucked out, re modeled the house since we got a good price. This would NOT be my advice for anyone. I know the stress added a few thousand gray hairs to my head.

 

[Eastbayboy]

We just bought our new home with a recast loan and move just three weeks ago. Payments are high for three months then when my home sells, I’ll slam the equity into the new loan. After we moved out we had the house painted, termite work, roof installed, hardwood floors refinished and had the house staged. Today was the first open house. Traffic was really strong and hoping to get an offer in the a week or two. If not, we can cover the two loans with my income from a pension and my retirement savings and my wife working until then.

We did not want to feel rushed in selling our house and then see if we can buy one in a quick time. The market is still tight and when a good house comes on the market it gets sold.

A disclaimer, our old house is in the SF Bay Area where the market is still doing good. That is why we felt comfortable doing the two mortgage deal. If we lived in an area where the market fluctuates one way or another, I wouldn’t do what I did.

Recast loans are not touted too much. I went through two loan agents before going to Wells Fargo (I know they did some sleazy crap). There rates are really competitive and costs are reasonable.

Great news for the OP parents!

 

[Ronstar]

I wouldn't mind selling our house, moving into a short term rental, and then move again to a new house. But I'm going to try to time it so that we can skip the short term rental. Timing probably won't work, but I'm going to try.

Our snowbird condo is under contract, to close mid june. Plan is to pick a lot and builder and begin new house build around mid june. And to put our house on the market around mid june. Hopefully the new house gets done and our house sell about the same time.