In Part 1 of this series, we highlighted how homeowners can access the necessary up-front cash through savings, investment accounts, equity in their home and other solutions to purchase a home before they sell. Having a place to go before you list is the key to being able to list confidently in a low inventory, seller’s market. But even homeowners who can’t access upfront cash have options. I present Part 2 of my case. #1 Consider selling your home to a buyer who will rent your home back to you. How convenient would it be to pull out your home’s equity so you can shop while still having the luxury of staying in your home? That’s just what a rentback does and exactly why it has become common practice in recent years. Rentbacks – also referred to as possession by seller agreements – allow homeowners to stay in their home up to 60 days after it is sold. And if you are lucky enough to find a cash buyer, then the term can be as long as you like! Lenders require borrowers to occupy a new home within 60 days of closing. Otherwise, it would be underwritten as an investment loan which carries larger down payment requirements, higher closing costs, and stricter underwriting guidelines. The lender-blessed rentback solution allows a seller to get their proceeds - or cash - out of their home at closing so they can write an offer on another home without being contingent on the sale of their home. And in a competitive market where an offer contingent on selling your home will almost certainly fail, this trick can make all the difference! But what if it takes you longer than 60 days to find a home? For you, I offer my final solution in this two-part series. #2 Consider renting to give you time to shop. Renting has earned a bad wrap as a long-term housing solution. And rightly so. But for a short-term solution, it can be just what the doctor ordered. Qualified tenants can rent or lease homes for 6-12 months – allowing them the time needed to navigate the market, purchase, and improve their next home. Also, Airbnb and VRBO have made furnished, short-term solutions popular - meeting the needs of even those looking for just a few weeks of transition time. When all else fails, family members with multi-generational living solutions or separate, dedicated living spaces like a basement can meet the need, too. While not ideal long-term, they sure can meet a need temporarily. With that, I rest my case. If the jury is still out and you remain unconvinced, then moving may not be best for you right now. But if you know a needed move is on the horizon - and my case has cast at least a reasonable doubt in your mind - take some time to look a bit deeper at the facts of my case. Maybe the verdict will be that a move is easier than you thought. Never want to miss a post? For more useful real estate tips & tricks, subscribe to our mailing list or contact us with any real estate questions.
Authored by: Kat Medaries, REALTOR® MT Realty Advisors of Long & Foster Real Estate Village of Midlothian Sales, 1100 Jefferson Green Circle, Midlothian, VA 23113 Licensed to sell in the Commonwealth of VA | Equal Housing Opportunity For informational purposes only. Not intended as legal, financial or credit counseling advice. Seek the assistance of a professional should you require.
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