How to do a “move-up” buy

Posted on 10 September 2012 by vvandervort

Bursting at the seams in your current San Carlos home? If so, you are likely considering whether you should expand your current digs or attempt the “move-up”.  Since we all tend to like the status quo and don’t like to tread into the unknown, I thought I’d take the opportunity to shed some light on how one goes about doing a move-up transition in San Carlos or frankly, whatever town you may be residing in along the peninsula.

One option is that you buy first.

There are two ways of doing this.  If you have the cash available for your down payment without selling first and if you can get pre-approved while carrying your first home, then you are free to go off and purchase the new home while still holding on to your current home.  The beauty of this is that you are not left homeless.  You can close on the new home, move into it, and then get your old home on the market.  The downside of this is that you could get stuck with two homes.  I actually had this almost happen to some clients of mine back in the Summer of 2008 when the market cooled very quickly during the “mortgage meltdown”.  They thankfully got the home sold before it really got bad, but they were lucky.

The other way of buying first is that you make it contingent upon you selling your home.  This is much less risky, but it is also very limiting.  You can only go after homes where the seller will consider this and that typically only happens when homes have sat on the market for a while.  So if you want the house that everybody else wants, then you’re not going to get it if you have to make your offer contingent upon selling your current home.  You are left with the over-priced and the unwanted – at least when our San Carlos market is hot.  If you go with the “contingent offer” maneuver, then you negotiate how long you have to get your home into contract – usually about 2-4 weeks.

Next option for you move-up San Carlos buyers, is to sell first.

This is wading into the big unknown because what you do know is that you are going to sell the roof over your head and head off to who-knows-where.  There are short term rentals in the vicinity (my clients have had the most success in Foster City for finding an apartment to rent for 3 months).  You can even choose to move there before you put your home on the market which will make it less stressful having your home on the market.  However, optimism abounds and lots of people put their house on the market, get it into contract, and then start seriously searching for their next home with the thought that you could get something and not have to move twice.  I always work to negotiate as long of a rent back as possible for my sellers so that they can increase their chance of finding another home before they have to move out and decrease their chance of having to move twice.  The downside of the “sell first” option is the distinct possibility of having to move twice.

If you are going to sell first, another way to do it is that you sell with it subject to you finding a replacement home – then you guarantee you don’t have to move twice.  This doesn’t go over too well with the prospective buyers because many of them have deadlines for having to get settled and they can’t be left hanging while you try and find a home.  It makes it much tougher to get multiple offers on a home when you can only work with buyers who can work with your requirement to find another home first.

Control & Negotiation

Everyone wants a deal – the best deal they can get.  What I can tell you for sure is that you will have the most control and give yourself the greatest chance at negotiating if you sell first and then buy after you’ve closed on your current home.  This also gives you the best chance of getting the home you want when you go to buy because you aren’t left with the “leftovers”.

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