By Erika George & Kari McGee, February 18, 2021
By Erika George & Kari McGee, February 18, 2021
As we write this on February 18, 2021 there are 465 detached homes for sale in all of Portland. 465 detached homes total! If you look at condos and attached homes, that adds another 520 properties for sale if you are willing to consider this type of home ownership. In a rare twist, inventory levels in the suburbs are even lower than the city of Portland!
So how in the world can you think of selling your home before you’ve found something to buy in this low inventory market?
Well, we’ve got some suggestions because we’re having success even in this tight inventory market. First of all, keep in mind that if you are considering a move, it’s because something in your current living situation isn’t working for you. While there is no perfect home out there, in our experience, we’ve seen great satisfaction from our clients who have moved and improved upon their top 3 – 5 needs or wants.
Additionally, interest rates are so low that while there aren’t a lot of homes to choose from, your buying power is really strong right now. And we bet you’ll be thrilled by the amount you net from your sale!
Here are some options that have worked well for our clients even in this tight market:
This one is the obvious preference if you can swing it financially, and have a tolerance for some risk. This means you will need to qualify for paying both your current and future mortgage at the same time (if you are financing your purchase). We have yet to have clients actually pay for two mortgages at one time (who weren’t planning to do so), but it is a potential in this scenario. Having said that, we are more confident about you selling your current home quickly and effectively now, compared to any other market in the 16 years that Kari and Erika have been in real estate!
Pros: You can move out of your current home before you sell, directly into your new home. This avoids the difficulties of staging and living in your home, while prospective buyers are viewing it. The house you need to sell will be deep cleaned, professionally staged and will show incredibly well, thus increasing your final sales price, and reducing your time on the market.
Cons: Besides the risk of carrying two mortgages for a bit, you may need a Bridge Loan to provide funds for a down payment on your new home. We have two great lenders who can talk to you about bridge loans and “recasting” your loan after you close on the sale of your current home, so you can reduce your monthly mortgage payment on your new home. Contact us for more details or to hear how Erika managed this process when she purchased her own home with a Bridge Loan.
For those who don’t qualify for a purchase before they sell (called a contingent buyer), or for those who want to be certain of how much they have to spend before they purchase, a short term rental can reduce a lot of the stress involved in a buy-sell situation.
Pros: Renting for a while in a new neighborhood you are considering can ease the stress of committing to a purchase in a new part of town. It also allows you to know exactly how much you have to spend, and provides you the purchase leverage that time and liquid funds can afford. You can take the time to really find something you love and not be rushed into a decision that you may regret later. This also allows you to capitalize on the incredible sellers’ market we’re seeing right now, but bide some time and potentially buy in a better buyers’ market.
Cons: Yes, you have to move twice. Sort of. In Kari’s personal home buying experience, it’s more like moving 1.5 times! 60% – 70% of the stuff you pack can go into long-term storage (not to be unpacked until you arrive at your final destination). Additionally, there will be unknowns in your life for a while. How long it will take you to find your new home and where your new home will be located, will all be up in the air. And pets (especially multiple pets) are tricky when it comes to finding short term housing.
Given the huge amount of seller leverage right now, this option is definitely doable! You list and accept an offer on your current home with a long rent-back period (up to 60 days maximum for financed offers, or the sky’s the limit for cash offers) that allows you to stay in the home after closing. It’s even possible these days to make the sale of your home contingent on finding suitable replacement housing. Once you accept an offer, you bust a move to find your new dream home.
Pros: This option combines the best of both worlds. You get a sense of what the net will be on your sale before you start shopping for your new home, but (if all goes as planned), the timing allows you to move directly from your current home into your new home.
Cons: The pressure on timing in this scenario is high, and this can be stressful for some people. Additionally, your needs around timing may have the effect of reducing your negotiating leverage in both transactions. If you need the funds from the sale of your current home in order to purchase, this can have the effect of making your offer less desirable in a competitive situation. Generally, you will need to be through the inspection period on your current home, before you can be successful in a competitive offer situation for your purchase.
Which of these options is the most common? It’s actually number three! While it seems like a lot of moving pieces, we’ve been really successful at working out the details of the “Sell, Buy, Move Once” option for our clients. And in this market sellers can pretty much negotiate what they want in terms of timing and offer terms so, in spite of the challenges that may arise on your purchase, we’re seeing so much seller leverage that the transition details tend to fall into place.
If you would like a market analysis of your current home, or advice on how best to approach your particular situation, we’d be happy to arrange a Zoom meeting with you to see what makes the most sense for you!