Selling your current home, in order to buy your new home? This one is for you!
What is a Concurrent Closing?
A concurrent closing is used for selling one home and buying another in a coordinated manner.
Concurrent does not necessarily mean simultaneous. The actual closing of your sale and the purchase of your new home will have some time-gap between the two transactions. Usually, it can take as much as a few days to transfer the proceeds of your sale into the purchase of your new home.
In practice, this means the buyer of your current home is going to pay for the purchase of your new home. This transferring of monies is coordinated via the title & escrow process with the help of your agent and you. All mortgages and debts are typically handled at this time.
What about the gap between the two transactions?
There is a simple solution that’s easy for your realtor to negotiate. The fact is that the sale of your home will transact first. Then, subsequently, this will trigger the purchase of your new home to transact next.
Typically, we as agents negotiate using a simple Seller In Possession Addendum. This addendum shall be signed between you (the seller) and the buyers.
Essentially this agreement allows you to stay in your home after escrow closes for a determined amount of time. This solves the time-gap and allows your purchase finalize without leaving you in limbo. Usually 3-7 days does the trick.
Remember there are other tools available!
There are other tools that allow you to comfortably move forward with your home sale.
- You can list your home contingent on you finding a suitable replacement. The benefit to this is that you can accept a buyer’s offer because it is contingent on you finding a suitable replacement home for yourself. The disadvantage of this contingency strategy is that it may dissuade potential buyers to seek an alternative home, other than yours.
- You can negotiate a leaseback option with the buyer of your home. The leaseback option is a nice security blanket which will allow you valuable extra time beyond the “Seller in Possession Addendum.” You may want to consider this option for various reasons, such as logistics related to packing and moving. Similar disadvantages may apply to negotiations.
- Depending on your financial situation, you may opt for a bridge loan to qualify you to purchase your “new” home before selling your current one. This option may carry some extra risk, but it also may be one of the smoothest ways to manage the logistics of selling & buying.
You’re realtor will know all about how and when to apply these tools for your benefit.
So what’s next?!
Now for the fun part! Once you’ve made the decision to sell it’s time to start shopping for your new home.
Once you’ve found a house worthy of making an offer you can make offers contingent upon the listing and closing of your current residence. Most people selling their home will be understanding of your need to coordinate the transaction.
Typical discussions relating to contingent purchase offers are usually about time-frames. The seller will want to know if your home is already listed. If it is not listed they will want to understand your timeline before they accept an offer.
They will also inquire about other related things, such as if your asking price designed to sell quickly. Another consideration is the total days on market of the home you’re interested in. If this home has only recently hit the market, then the seller may elect to wait and test the market for non-contingent offers… rather than to accept a contingent offer.
The key to winning:
The key to winning the new home of your dreams is going to be related to conveying a solid value proposition! Because when you’re offering a good value, and a willingness to strike a deal… then most people will be absolutely ready to solidify a deal with you.
Let’s continue the discussion online or via email!
Chris Funke is a Bay Area native that offers real estate solutions to his clients. His experience as a licensed administrator for Senior Living Communities led him to offer 1% listings to his clients, saving them money and providing extra funding during transitional phases.
This is a deal he continues because he’s honored to help families maintain equity while transitioning homes. He is the marketing and sales director of NGN Realty with team members representing Santa Clara County, Fresno, San Luis Obispo, Avila Beach, Pismo Beach, Santa Barbara as well as across Southern California.