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Selling house - where to keep the cash?
Old 02-11-2020, 02:15 PM   #1
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Selling house - where to keep the cash?

I'm looking to sell my house, but don't know when I'll be buying another. Could be a month, could be 18 months.

I want liquidity so I can move fast when I find something I like.

Should I just look for a regular savings account with the best interest rate? Are there other options that don't require a lot of financial savvy? I don't want to over-complicate this.
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Old 02-11-2020, 02:18 PM   #2
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There are a few CDs out there that don't have a early w/d penalty (or a fairly short period) that might get you a little more interest than just a MM account or similar product.
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Old 02-11-2020, 02:22 PM   #3
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I stashed my $ in Ally Bank that has a CD without a penalty for withdrawal. I gave up just a little on the interest rate--but they pay a decent rate. Beat my Credit Union's .030 APR on savings accounts.

We put our last house on the market 10 days ago, and sold it to the third person that looked at it. It's the third house in a row that the third person bought. We're in it for a quick sale this time as insurance and utilities are eating us alive..
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Old 02-11-2020, 04:11 PM   #4
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I'd use an online savings account. mine happens to be at Discover Bank and pays 1.7%.... close to the 1.8% that 5-year brokered CDs are yielding on Vanguard but with no interest rate risk.... there are some that pay a little more around.

I have my online savings account linked to my local credit union account and transfer back and forth only take a couple days.
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Old 02-11-2020, 04:22 PM   #5
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I would either put it in a short term CD/Savings account (if under 250K), and maybe 1 month T bills if over the deposit limit. You could also split an amount over 250k between two banks.
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Old 02-11-2020, 04:22 PM   #6
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Or just put it in VMFXX...currently paying about 1.56%.
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Old 02-11-2020, 05:29 PM   #7
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Sold my HCOL house last spring, put it all in the Zero expense ratio Fidelity large cap stock fund. It is up 19% already, had to buy a bigger house in our new LCOL retirement locale.

In general, the two best times to invest in the stock market: 10 years ago, or today.
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Old 02-11-2020, 06:04 PM   #8
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Ironically, a housing market correction AFTER I sell would be a good thing for me, albeit painful for my 401k if it spreads to equities. But I'm not trying to time the market, just decided that it's time to sell & spend more time cruising.

Thinking about on-line accounts, is there any problem getting money quickly transferred out again, in case I find something and want to move quickly? I have this theory that having cash in hand (figuratively) might help with negotiations.

My PenFed Preferred savings account is at 1.6% now, although I may have to think about the 250K limit if I go that route. I sort of forgot about that.
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Old 02-11-2020, 06:44 PM   #9
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Quote:
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Thinking about on-line accounts, is there any problem getting money quickly transferred out again, in case I find something and want to move quickly? I have this theory that having cash in hand (figuratively) might help with negotiations.


that.
Nothing to worry about. We made a cash purchase offer, got it signed, and had to wait 30 days after that, a typical escrow period for the seller to move and for title work to be ready to close.

Took 3 days to sell the stock fund (see my post just prior above) to settle the stock sale and then one day to online transfer at no cost to our bank.
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Old 02-11-2020, 06:49 PM   #10
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Quote:
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.... Thinking about on-line accounts, is there any problem getting money quickly transferred out again, in case I find something and want to move quickly? I have this theory that having cash in hand (figuratively) might help with negotiations.

My PenFed Preferred savings account is at 1.6% now, although I may have to think about the 250K limit if I go that route. I sort of forgot about that.
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Nothing to worry about. We made a cash purchase offer, got it signed, and had to wait 30 days after that, a typical escrow period for the seller to move and for title work to be ready to close.

Took 3 days to sell the stock fund (see my post just prior above) to settle the stock sale and then one day to online transfer at no cost to our bank.
+1 while your offer will be for cash (in other words, no mortgage financing) it still takes a while for home inspection, title search, etc. which provides plenty of time between offer/contract and closing to get the money in place an ready to be wired to the closing agent.
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Old 02-11-2020, 08:07 PM   #11
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Do check with any bank on their daily and monthly withdrawal limits. Some banks, like Ally , have a daily limit of (don't remember) $150-$250k. Other's like Simple, Have a $10k daily limit. Those limits can be subverted by pulling from the bank with the funds rather than pushing, but if you want to move money fast it is worth checking on your options.
Also inquire about wire fees and limits, as you may need to wire funds to an escrow company for closing, and it would be problematic getting the escrow company to pull.
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Old 02-12-2020, 05:38 AM   #12
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Ally no penalty 11 month CDs are paying 1.9% for deposits over $25K. You can withdraw at any time past the initial 7 days without penalty.
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Old 02-12-2020, 09:26 AM   #13
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Quote:
Originally Posted by CaptTom View Post
I'm looking to sell my house, but don't know when I'll be buying another. Could be a month, could be 18 months.

I want liquidity so I can move fast when I find something I like.

Should I just look for a regular savings account with the best interest rate? Are there other options that don't require a lot of financial savvy? I don't want to over-complicate this.
Once you sell your house, you may find that you have considerable motivation to find another house ASAP. At least, if it was me, I would. If that is the case, then possibly your money will not need to be stashed for very long.

When I moved, I did it the other way around. I bought my new-to-me house first, and then sold the old one right away after moving. Both transactions were entirely cash with no mortgages involved. I used my bank accounts for temporary money storage after moving it there from Vanguard, while waiting for the closing date on my present home. But that was only for about a month. I did check with my bank in person throughout the process, as calmloki recommends, so that I knew they were aware of what was going on and "in the loop". They were very nice and did not seem to think I was a big time drug dealer or anything like that. Transfers to and from Vanguard were by wire, and to and from the real estate closings were by cashier's check that I hand carried.

Once I got the money from the old house in the bank, replenishing what I had spent on the new-to-me house, I transferred it from my bank to Vanguard ASAP; there it once again became part of my retirement nest egg.
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Old 02-12-2020, 10:15 AM   #14
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Why not just store it with your core position? I have Fidelity Investments and it includes a Core Position. Several choices there, but basically a holding account as you move money from and to funds, or for withdraws. Right now I'm using Fidelity Government Money Market, but there are plenty of other options for Core Position. Right now it says YTD is .15% and 1 Year is 1.77%.
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Old 02-12-2020, 11:02 AM   #15
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I’m in the same situation except we’ve been looking for several years. I keep the cash in an Ally savings account as well as several Ally no penalty CDs. By dividing it up between CDs I figure I won’t have to cash in a single large CD for more than we need.

We made an offer on a house last year but somebody else bid higher than we did. I learned that you want to attach a letter verifying the funds to the offer, and Ally took some time producing that. We got around it by saying we would get a loan and got a prequal letter, but they had to pull a credit report which dropped my score a few points.
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Old 02-12-2020, 01:46 PM   #16
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We we sold our house in 2005, I was crazy enough to put it all in OAKBX, a balanced fund. I new it would be for at least 5 years.

I was very lucky, because OAKBX only dropped 10% during the 2008 debacle, unlike many balanced funds which fared far worse. And it had already appreciated a lot between 2005 up to 2008. By 2010, when we bought another house, the fund had appreciated quite a bit.

And during that 2008 to 2010 time we watched the huge housing market collapse. We even qualified for and got an $8000 tax rebate when we bought our home in 2010, based on our low 2009 income. Closed just before the 2010 deadline. Sweet!

I don’t think I’d recommend this approach for 5 years, but hey, it worked out for us!
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Old 02-12-2020, 02:25 PM   #17
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Ironically, a housing market correction AFTER I sell would be a good thing for me, albeit painful for my 401k if it spreads to equities. But I'm not trying to time the market, just decided that it's time to sell & spend more time cruising.
Our CA house (Silicon Valley) we sold in late 2018 has dropped to it's value of almost five years ago (if the online real estate sites are to be believed). It is a pretty good bet the upward spiral in real estate prices of the prior decade won't continue there.
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Old 02-12-2020, 08:15 PM   #18
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More good ideas, thanks all!

Right now the plan is to be "homeless" (i.e.; cruising) for at least 12 months, possibly 18. Maybe along the way we'll find a home port we fall in love with. Maybe we'll just keep cruising until it's time to swallow the anchor and move back ashore to a LCOL area near family.

I guess there's really no need for quick liquidity. The rest of the paperwork will no doubt take longer than retrieving the cash. I'm liking the Ally Bank option. I wasn't counting on it, but there is a non-trivial income stream from the interest, too. I'd just let it accumulate in case I wanted to go over budget a little on the next house.
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