General Area in Castro>Question Details

Steven Lind, Both Buyer and Seller in San Francisco, CA

How do I sell my home in SF and buy another without renting in between?

Asked by Steven Lind, San Francisco, CA Thu Sep 20, 2007

I could handle two mortgages for a few months, but where do I get the money for the down payment? Last time we bought and sold it was a nightmare trying to time everything. In the end, the sale did not close when it was supposed to and we got a bridge loan from a contractor to close on the purchase, but I don't want to go through that again.

Help the community by answering this question:

Answers

10
Steven, I have had several sellers in that same situation recently. What most have done is a short rent back period on the home they were selling. Home #1 is closed, then the next day (or two) home #2 is closed with the funds from the closing of home #1. Usually one week was sufficient to make the move. This has worked out really well with my sellers only having to move once and pay rent for a week or so.
1 vote Thank Flag Link Tue Sep 25, 2007
Hi Steven,

I am not in CA, but reports for your market have been good lately. This means that you should be able to sell, if you are priced right and your Realtor markets your home to a broad pool of buyers.

There is no way for any of us to provide you a surefire way of getting through this process without renting, or guaranteeing that you won’t have to carry two mortgages for longer than 2 months. We don’t make the decision for you of what offer to accept, or what you will pay for your next home. While we can advise on market conditions, the decisions are ultimately made by the buyers and the sellers.

I do recommend that sellers sell first and then purchase, unless they are willing and capable of carrying the second mortgage for 8-12 months and committed to sell, even if they have to reduce their price well below originally expected benchmarks. Once you buy, you have no choice but to do what it takes to sell. Right now, you have options without pressure. A double move is less hassle than pressure. While you could buy first, and be lucky to sell within 30 days, you would be making financial decisions based on an expectation without guarantees.

If you sell first, you will have a limited time in which to secure a new home, or you will have to rent. Now, are you the buyer who looks at 15 homes and makes a decision? Or, are you the buyer who looks at 200 and cannot make a decision? How realistic is it for you to find a new home in a short time span will depend upon inventory availability and you. A Realtor can define the inventory, and reasonably project short tem trends. We can’t predict a specific buyer behavior.

I recommend selling first, then buying. Start your research now for your next purchase. Once you are ready to purchase, it will speed up the process for you. I don’t recommend contingent purchases, but if you can find a seller willing to take your offer contingent upon you finding a buyer, you can try it. Look at properties, identify your most important criteria, be familiar with comps and prices in the neighborhoods where you want to live. Once you sell, you approach the buying process with knowledge and confidence expediting the decision making process.

Use this time also to work with a lender to get your docs in order for a smooth and quick closing.

Best of luck!
Deborah
1 vote Thank Flag Link Tue Sep 25, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Steven;
Short Answer: Don't try it!
Long Answer: Do not attempt this transaction within the aforementioned timeline!
If I offered to pay you $5,000 to move the contents of my house into a storage facility, would you? Would you accept $5,000 (or whatever the higher of the two mortgages you would potentially pay) for a few days of work?
You already experienced the headaches, and I quote, "Last time we bought and sold it was a nightmare trying to time everything." And yet, somehow you think or just hope it will go smoother this time around?

AND AT ALL COSTS.... DO NOT BUY BEFORE YOU SELL.
Best case scenario, you have to take out a short-term loan.
Worst case scenario, you are stuck with 2 mortgages for who knows how long.
Sell the house first, save the money, invest in a mutual fund, take your time finding the perfect home and KEEP YOUR SANITY!

As a licensed Realtor, my duty is to tell you what you NEED to hear, not what you want to hear.
Web Reference: http://www.mlee.golyon.com
1 vote Thank Flag Link Tue Sep 25, 2007
Hi Steven. I completely understand only wanting to make one move, and for that and a couple of other reasons, it makes sense to buy and then sell. First you will not be in such a hurry to buy; you can take a bit more time and make sure you find the right place. Second and more importantly, your home will most likely sell quicker and for a higher price if it is vacant. Showings are much easier this way and there can be more of them; the key is getting as many people into your house as possible.

The down payment for your purchase can come from an equity line of credit on your current home should you qualify. This needs to be taken out before your house is on the market. The great thing about a line of credit, as opposed to a bridge loan, is that you don't start making payments on it until you use it. It is like a credit card. If you get one now, but don't find your new home from two more months, you haven't paid anything in that time against the line of credit. You will, of course, add that on to your mortgage payments for the time between the purchase of your new home and the sale of your current home.

You mentioned being OK with two mortgages for a few months, and that is more than enough time in San Francisco to sell your home. Especially if it is vacant and presented well. The key in the sale will be pricing it correctly. If a home sits on the market longer than average it is almost always because it is priced too high.

Your first step should be talking to a couple of different lenders. Ask about their equity lines and bridge loans so that you can compare. Contact me if you would like referrals. Next you will need a Realtor to help you find your new home, sell your current home, and drive you smoothly through the process.
1 vote Thank Flag Link Thu Sep 20, 2007
In this market I would advise my client to get into contract on your sale first while also shopping for the next. It shouldn't be a problem moving into new one once you are in contract on the sale of your current home. If neccessary, you could ask for a 45 day escrow on the sale of your current home.
0 votes Thank Flag Link Mon Mar 31, 2008
Hi Steve,

Dave and Sheila have a good answer. You can buy a new property subject to the sale of your old home and you can sell your old home subject to your finding a new one --but most buyers today would not be happy about that as it could take forever and/or never happen and they would be out of their purchase. To fix that, you could sell with a fixed time rent-back of 30,60 or 90 days paying the new Buyers PITI as rent.
That is assuming you are confident of finding a new home in that time period.

Do you have an Equity line of Credit on your current home? If not, you should get one. Most banks like you to keep it for 3 years or they charge about $500 for cancelling..... I believe you can take the Equity Line and transfer it to your new home but you need to ask a banker. That Equity Line is your downpayment on your new home. With today's problems, getting 100% financing for your new purchase is tough. Do you have a relationship with your banker or a mortgage broker whom you could ask? You might still be able to do that but the rate is probably higher......

I would call him/her or touch base with me and I will give you several names of excellent bankers and mortgage brokers with whom you could speak. He or she is the one to really help you! Was your last purchase in San Francisco? If yes, are you working with the same realtor? If yes, he or she should have a ton of contacts who would be very willing to work out financing for you.

Cheers,

Sally
0 votes Thank Flag Link Sat Mar 29, 2008
Most often clients use an equity loan on their old home for the bridge of down payment. However, the credit line provider is not happy to have the loan paid off in just a few months and often charges an early closure fee ranging to about $500. If you can qualify, you may want to put less money down instead and obtain a 2nd mortgage on the new house. After you sell the old house, you can pay off the 2nd mortgage on the new home and benefit from the lower payments. Given the status of the loan market, high ltv loans are more difficult to come by and definately more expensive. If all your down payment is in your existing home, then the bridge equity line remains the cheapest & quickest option.

Please view my profile for legal disclosure.
Web Reference: http://www.slarson.com
0 votes Thank Flag Link Mon Oct 1, 2007
Steve,
If you have explored the move-up market and feel confident you'll be able to FIND a home then here are your options:
1. Sell your home, close the escrow, take your cash, rent and then go out and get the best deal you can. If you are a buyer who has to sell all you’re doing is tying everyone up and creating a lot of frustration. I guarantee you'll get a better deal WITHOUT making your offer contingent on the sale of your home.
2. Sell your home and ask for a rent-back period of 6 months. You'll most likely have to pay the new Buyer's Principle, Interest, Taxes and Insurance (all prorated) but at least you'll know you're got cash in hand and no headaches.
3. You could buy another property and have the Seller carry not only a 2nd but 3rd note secured by a deed of trust on the new property which gets paid off when you sell your current home. You could make then "straight" notes, no payments, interest accruing. Conversely, they could secure the 3rd or 2nd on your current home. This would generate "equity" for you and they would be paid off at the time of the sale of your current property.
4. Do #1 above and forget the rest of these! I can get very creative but the Seller on the other end may NOT be that sophisticated AND using the owner carry back scenarios strictly limit the Homes you can make offers on. So bite the bullet, sell first, go rent, become a POWER buyer!
0 votes Thank Flag Link Thu Sep 20, 2007
With a bridge loan or an equity line of credit.
A bridge loan you can get from a Bank or from private lenders at high percentage. It is purely short term just to get you into the new house. I have done it for several clients and it works very well if done right.
If you have a large amount of equity in the house take out a line of credit and make the downpayment with it on the next home. Most important is a great Mortgage broker on your side.

Or simply come to one of my next seminars on Oct 10 (evening)or Oct 20(morning).
Location is : 2355 Market Street@Castro
Contact me for details if you are interested.
Web Reference: http://www.TanjaBeck.com
0 votes Thank Flag Link Thu Sep 20, 2007
The safest way is to make an offer on a property contingent on the sale of your home. Many sellers are reluctant to accept an offer like that, but if you find one who will, then if the sale of your home falls through, you are not obligated to buy the new home.
As for a downpayment, one option is to get a home equity line of credit. Provided you have substantial equity in your current home, you could get a Heloc prior to putting your home on the market, and use the funds as a downpayment on the home you are buying.
Best of luck to you, and I hope this experience is better than the last!
0 votes Thank Flag Link Thu Sep 20, 2007
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer