Moving in a seller’s market isn’t always the easiest thing to do. You may be able to find a buyer for your house, but can you quickly and easily find the home of your dreams? When there are more buyers looking for properties than there are properties on the market, you may find that you’ve sold your house and now have nowhere to go. This is especially true in our area of Virginia. There are times when there are less than 600 single-family homes on the market in this area. What can you do if you have decided to move, but it’s a seller’s market? Here are a few tips that can make the situation less stressful.
Include a “Home to Purchase” Contingency in the Contract
You may be familiar with a “home to sell” contingency in a real estate contract. This clause indicates that the contract cannot go through until the buyer sells their home. If the buyer sells their current home, the transaction can move forward. Basically, the buyer needs the money from the sell of their current home in order to purchase a new property from the seller.
A “home to purchase” contingency is basically the opposite of this. This contingency is put into the contract by the seller. It states that the contract will be null and void if the seller does not find a home and put in an accepted bid by a specific date. If you’re selling your home, you may put a “home to purchase” contingency in the contract that says you have two months to find a new house. If you haven’t done so by the end of that two month period, you keep your current home and the buyer is refunded any earnest money they put down. It’s a way of ensuring that you have a home, even if it’s not a new property.
Another clause you can put into the contract is a “lease back” clause. In this case, you actually lease or rent your home back from the new owner after closing. You no longer own the home—the sale of the property is completed—but you rent it for a few months until you find a new house. You and the buyers will need to negotiate everything regarding the lease, including the monthly payment and for how long you can rent your old home, before closing.
A bridge loan is a type of loan that allows you to purchase a new property without selling your current one. It may be used to pay off your existing mortgage, function as a second mortgage, or serve as a way of financing your new home. It usually has a slightly higher rate than a conventional mortgage, and closing costs may also be higher than other types of loans. However, it may be your only option if you’re unable to quickly sell your home and the seller won’t agree to allow you to lease the property back from them or won’t agree to a “home to purchase” contingency.
All three of these are good options for moving in a seller’s market, but they may not all be right for you. Take the time to consider each and discuss these options with your agent before making any decision.