“Homeowners have to consider what they get for their home when they sell it, but they also have to consider what they give up. I always recommend potential sellers to look at the houses on the market, and if they don’t see anything they like, I recommend waiting with a list until they do, “said Portland, OR Pyjama People broker Rebecca Walter.
6 options for selling and buying in a seller’s market
When deciding to sell and buy in a seller’s market, it can seem overwhelming to know what steps to take. Fortunately, there are six different options you can explore as you prepare sell your house.
1) Buy from a seller before selling in the market
While browsing your favorite real estate app For homes you are interested in, your first instinct may be to buy a new home before selling it. Once you’ve found a home to bid, you will likely have to compete with other potential buyers. When you place a bid, you want to place as few unforeseen events as possible on your bid. In a seller’s market, you may be tempted to bid for a home that relies on the sale of your current home. However, this could lead sellers to reject your offer. Another option to consider is gap financing, such as a Home Equity Line of Credit (HELOC) or a bridging loan.
For those unfamiliar with HELOC or bridging loans, they use your home equity, the difference between the value of your home and the amount owed on your mortgage, to secure the loan. HELOC loans allow you to borrow against your home, giving you access to money based on the value of your home. A Bridging loan is a short-term loan that allows you to use the equity in your home for a down payment on another home. HELOC or bridging loans can be good options for people looking to buy a home before selling it, but that’s always important talk to your lender to know if you qualify for one of these loans.
2) First buy and sell your home to an iBuyer
Another option to consider when selling and buying in a seller’s market is to sell your home to an iBuyer. If you have found the right home and are ready to make an offer, but have not listed your current home, you can sell your home to an iBuyer quickly. With an iBuyer, you can get a full cash offer on your home so you can make a stronger offer on your next home.
You can usually close within 10 to 60 days of accepting the iBuyer’s offer. That way, you can quickly sell your current home and buy your next home without the hassle of upfront repairs, staging, or negotiating.
3) Sell first, but make a deal with the buyer
Fortunately, if you have a home in a seller’s market, you have the upper hand. Buyers are often willing to offer incentives to close the deal, and they may be more flexible in timing. That means you can ask for more time when you need it so you can find a home to buy without missing out on the sale of your current home, especially in a seller’s market.
You may also want to consider applying for a lease from potential home buyers. A leaseback agreement means that the home buyer buys your home and you rent it from him for a certain period of time. This gives you the flexibility to stay in your home when you are moving to your next home.
4) Make a conditional offer, but make it strong
If you don’t qualify for a HELOC or bridging loan, you can make an offer on a home that depends on the sale of your current one, but it should be as strong as possible. There are many different ways to make your offer stand out to buyers.
If you MUST make a conditional offer, offer a higher price than the house is listed for. You can also offer to pay for repairs and put down more money sincerely. In addition, you can opt out of the unscheduled inspection and assessment. Discuss the options with your broker to make the strongest possible offer, ”says Walter.
5) Turn your home into an investment property
When you are selling and buying from a seller’s market, another option to consider is renting out your current home until you find a new home to buy. In a market where there are more buyers than sellers, it is possible to find renters who pay more than what you owe each month on your mortgage loan. But it’s important to talk to a lender first to make sure renting out your home is an option. If your home is not fully paid off and you need another mortgage to buy your next home, it means taking out two loans at the same time.
“If you are in a situation where you can rent out your existing home and it is profitable, then that is the dream scenario. You can continue to build equity in your home while your mortgage is being paid by someone else. But there is always a trade-off. You can suddenly get stuck with high costs for repairs or problems with the property. Even if you have a property management company, they take part. It can be very rewarding, but also very challenging, ”said Los Angeles, CA Pyjama People broker Arto Poladian.
6) Don’t buy… for now
As a homeowner, you may feel pressured to move into a home immediately after you sell your current home. However, it can be a good option to move into a rental property after the sale of your home. If you are open to moving into a rental property, you can sell your current home and save the money for when the time is right to buy.
Depending on your situation, this can take the pressure off of finding a new place to live when selling and buying in a seller’s market. Sometimes the inconvenience of moving twice in a short amount of time can be worth it if you can find a rental in your price range.
“Some of my clients have no problem finding a rental that meets their needs, but others with specific requirements – such as staying in a particular school district – may find it challenging,” said Poladian. “If you are open to renting out, I suggest you start looking for rental properties as soon as you have an offer for your home and any unforeseen events on the offer have been cleared, meaning the deal will likely go through. If you don’t want to commit to a one-year lease, you should check out short-term housing-style apartments that offer three to six-month stays. “
While the idea of buying and selling a home in the marketplace from a seller may seem overwhelming, there are many options available to make this transition smooth. By talking to your real estate agent and lender, you can decide which of these six options will best suit your home ownership goals.