Buyer Options if you need to Sell first
It’s spring, the weather is heating up and so is the Coastside real estate market. For the first time since the early to mid-2000s, we are seeing several homes go under contract within the first week of when they’re listed (sometimes even before). Also, in some locations here, it’s again becoming a reality to see multiple offers over the asking price for some homes.
This is obviously welcome news for those homeowners thinking about selling their property. Buyers are out there in force and searching for a suitable home with values still quite attractive and interest rates still under 5%. Now may be a good time for homeowners thinking about moving up to a larger home or moving to a home in a neighborhood in which they’ve desired to live. For Coastsiders, that may mean finally being able to move to an ocean view home, or a more private location, or something a little more rural and closer to San Francisco now that the tunnel is complete.
However, many homeowners ask themselves, “How can I sell my house if I haven’t found another home to buy yet?” Or, “If this is a seller’s market, what will happen when I try to buy another house and maybe lose out to another buyer?”
Listing your home for sale before you’ve found another might seem problematic on the surface, but there are ways to do it, so long as you cover your bases and work with trusted loan and real estate professionals.
Seller Contingency Many people are familiar with the concept of homebuyers making their offer to purchase a property contingent upon the sale of their home in a certain amount of time. Sellers may specify in the Purchase Contract that they are willing to sell their home to a buyer contingent upon them finding a replacement home to purchase in a certain period of time. If you’re interested in selling your home, but are looking for a little peace of mind, consider the benefits of a seller contingency in a seller’s market.
Cross-Collateralization If you’re interested in selling your home but are concerned about how to finance the purchase of another home while still holding a mortgage on your current home, cross-collateralization may be an option. It will be worth calling a few residential lenders, including Princeton Capital, Coldwell Banker Residential Brokerage’s mortgage affiliate, to discuss that type of financing arrangement.
Cross-collateralization is comparable to taking out a second mortgage on your home. You use the equity in your current home as the collateral for the loan on a new home, giving you greater freedom to list your home for sale.
Renting No one can really know the precise “best” time in any market to buy or sell, so another option may be to take advantage of the current, strong real estate market by selling now, renting a home and then buying at a later time when the market may slow down. While the rental market is very tight now, good properties can be found by having your rental application ready, talking to landlords, and to your Realtor about off market opportunities.
By selling now and temporarily renting you are better able to take your time and find the right home at the right price without feeling pressured to immediately buy something else. Additionally, by waiting to buy until the after the market changes you may be able to avoid multiple offer situations that can be challenging for buyers.
Today’s real estate market is as hot for many sellers as it has been in years. While there are challenges for sellers as well as buyers, you don’t have to let that stop you from taking advantage of the current market conditions. In addition, the Coastside still remains a fantastic value for San Mateo County real estate compared to the busier peninsula towns such as Belmont, San Carlos, Redwood City or Portola Valley.
Real Life Examples of first week sales from closings in the last 60 days: 10 out of 57 sales.