So Denver’s Market is hot…
Sellers are getting more than full price and great terms in bidding wars… That’s great for everybody that happens to need to sell who is relocating out of state to another area where real estate is much less expensive. They are selling high and and buying low by doing that right? But what about the rest of us?
What if you don’t want to move to another state? Maybe you want to move up and buy a little bigger house or in a different neighborhood? Do you want a rental? If the answer to any of these questions is “yes” then read on.
Scenario 1: You want to sell but don’t want to have to rent while you are looking for your next house to buy? This is probably the Number 1 reason why people don’t sell.
This is a reasonable and common fear. The good news is there is a way around this. Two solutions are “Seller Contingencies” and Seller Rent Backs or Post Closing Occupancy. Here’s how it works. Because the Denver market is such an extreme sellers market, sellers have the upper hand in negotiating with buyers. If you have a well maintained house and you price it when comparable sales show it should be priced at you will most likely have at least 5 or 6 offers to choose from.While price is an important part of the offer we also need to look at how qualified the buyer is, their down payment amount and possibly most importantly their terms. By terms I mean what are their dates and deadlines for the inspection, appraisal and getting their loan. These are all negotiable. In a competitive market Buyers are looking to find a way to make their offer “win”. HERE IS THE IMPORTANT PART.
Option A: (Seller Contingency)
We can write in the contract that the seller has a contingency to find a house to buyer within “x” number of days and if they can’t they can terminate the contract. Usually 2 weeks is what a buyer is comfortable with before they start feeling nervous and want to get out of the contract and move on. In a typical CO contract to buy contract the Seller has ZERO opportunities to terminate the contract without being exposed to the risk of being sued for damages.
Option B (Seller Rent Back)
We can ask the buyer to allow you as the seller to stay in your house and rent it back from the buyers after the closing. This is usually for a period of at least 30 days, and more commonly 60 days, after closing to find a new house. In addition to that once your house is under contract with a buyer you are in a good buying position to make an offer on a house to buy. Most sellers will not entertain an offer from buyers that needs to sell their house in order to buy but their house is not under contract yet with another buyer. What this means is that you would have the 30 days to look for a house while your house to sell is under contract before closing plus the additional 30-60 days after closing from the “rent back” to look for the house while you are “renting” the house back after closing. This gives you around 90 days to look for a house, close and move in. You profit from the housing market, you are able to put a large down payment on your next house, take advantage of historically low mortgage rates and you only have to move once out of your house and into the next one. In addition to this, if you are moving up and buying a more expensive home in the $500K+ price range there is much less competition and you most likely won’t have to experience the feeding frenzy that buyers in the under $400K range are experiencing right now. I’ve made this work for a half dozen clients so far this year.
This is the quick and dirty explanation. If you want to talk more about how this would work, or to see what your house is worth in this market give me a call at 303-506-6786 or email me at aaron@inhabitdenver.com.
Look for the next post on how to take advantage of this market if you are open to renting out your house!