Well, it was a quiet day which gives me an opportunity to explain something that keeps cropping up in my world. Sellers who have to sell their current property in order to buy. Tricky but not impossible. Let me elaborate.
Let me lay out the scenario for you. A seller owns their present home and needs to sell it in order to buy. That can be because they need the proceeds to apply towards their new purchase and/or they need to divest themselves of it in order to qualify for the new loan. Very typical situation. How to solve it? Sell your home with an additional CAR form COP attached to the sale documents. COP stands for Contingency for Sale or Purchase of Another Property. Real Estate gibberish? Definitely, so let me explain further. This form can be used for a buyer or a seller. In the case of a seller, basically we are saying with this form that the seller accepts the buyers offer with the caveat that the seller has a certain period of time to identify a replacement property and actively release their contingency to do so. What does "identify" mean? That means you seller actually enters into a contract for purchase. In that contract for purchase, the COP form is used again, this time with the seller as the buyer. In my deals like this one, I also add language that states concurrent closing must occur. That way, if the sale on your present property falls apart during the escrow period, you can then cancel the purchase of the new property because concurrent closing is obviously not possible. Both parties then can mutually decide if they want to cancel and go their separate ways or your seller can give you more time to find another buyer.
This all sounds great, and it is. But, enter into the mix the crazy swift market we have right now. You as the seller are now also a buyer and are competing with other buyers that don't have this contingency sell. A deal breaker? Not necessarily. You can still be a strong buyer by doing several things. One, already have your present home in escrow (remember the COP we talked about above - you have a deal but your buyer is waiting for you to find a replacement property). That is an entirely different position than just having your house on the market (or not even on the market yet) but not having a buyer signed up. Most if not all sellers today will not entertain an offer from a buyer who is purchasing with a COP but does not yet have a buyer (because the seller is taking their property off the market for you - risky if you don't have your property sold yet). Two, you can be a strong buyer using a COP if you have a lot of money down or are paying cash. Your competition may be buyers with very little skin in the game. The more money you bring to the table, the stronger you will appear in terms of ability to get a loan or be a cash buyer. Three, if you are using a loan to buy, get prequalified with a LOCAL and respected lender. Who you are using for a loan plays a big part in how a seller and their agent will view your offer. Four, align yourself with a top producing highly respected local real estate agent. When the competition is on, the strength and integrity of your agent plays a significant role in the seller and listing agents opinion. Five, when possible, have the same agent list your present home and also be your agent on the purchase (assuming both properties are in the same area). In this way, the seller of your replacement property and their agent will be assured of good communication and strong sales ability on both ends.
In addition, language should also be added to the listing agreement for your present home which protects you from having to sell your house and/or having a financial obligation to the brokerage if you don't find a suitable replacement property.
Easy right? I know it sounds complicated but I have done this successfully many times because I am very fluent and comfortable with the complicated yet predictive contract language that needs to be in place to make this all come together. So all you sellers out there trying to figure out how to buy and sell at the same time, I just gave you the road map. Now all you have to do is embark on the journey.
And here are the few things from today:
New Listing
1516 Monarch, Santa Ynez (4/3 on 5 acres) $1,395,000 Go green! All electric home with power from solar panels. I particularly like this street with like homes on 5 acres or so. A ways out of town but not too far. Normal sale.
Back on the Market
3667 Tivola, Santa Ynez (3/2 on .23 of an acre) 425K Those on my Daily Insider email list will get more detail on this property. Normal sale.
Sold
407 Glennora, Buellton (4/2 on .23 of an acre) Listed at 300K and sold final for 310K. This property was already under contract when it hit the MLS back in November. A long short sale negotiation period delivered a price far below current value. It was fair back in November but things have changed since then. I guess it pays to wait sometimes.
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Realtor
President SYV Association of Realtors 2013
DRE #01357602
Prudential CA Realty
P.O. Box 778
Los Olivos CA 93441
805.233.6461 efax
805.448.2727 direct
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