As kids, we are asked, "Which came first - the chicken or the egg?" Of course, conventional wisdom sees there can be no chicken without an egg, and no egg without a chicken.
So, what do homeowners do in today's market of tight inventory if they wish to sell? Properly priced and prepared, a home in DC is likely to go under contract within a matter of days - maybe as little as its first day on the market. However, it may take longer for the seller to find the right home to purchase, and many tries to get the right home under contract and to settlement.
Here are a few strategies I've put to work for some of my clients wishing to move from one property to the next - whether to upsize, downsize or merely relocate from one area to the next:
1) Post Settlement Occupancy: Some call this Rent-Back. When my seller needs to buy, I negotiate terms to allow the seller to reach settlement and then remain in the home for up to 59 days after settlement in order to find their next home, get it under contract and reach settlement on their purchase property. Given that the normal distance between contract ratification and settlement is approximately 25-30 days, this provides up to nearly three months of cushion to accomplish the purchase goals.
2) Extended Escrow: Sometimes, creating a long escrow - the period between contract ratification and settlement - is mutually beneficial to Buyer and Seller. For one, it seals a deal with a future home for the Buyer. But it also allows the Seller an opportunity to find their purchase home, get it under contract and reach settlement. Sometimes a 60- or 90-day escrow can be everyone's best friend.
Secure Short-Term Rental:
Finding a short-term rental removes some of the stress and pressure of finding the next home ASAP, and allowing the home search to be motivated purely by what the consumer is searching for.
4) Bridge Loan: A variety of lenders understand the competitive nature of the market and are offering bridge loan products, which allow a Seller to cash out a down payment for the next home, underwrite the mortgage and carry a loan on their existing home ...providing the existing home sells in the next 12 months. Individual counsel and analysis tells whether or not each Buyer/ Seller qualifies, and if it makes sense ...but a strategy sometimes worth consideration nonetheless.
Speaking of loan products, for those carrying student loans, I've recently learned that Fannie Mae and Freddie Mac are recalculating how they evaluate student debt in their debt-to-income ratio. So, if you've been denied financing, and you're driven to buy, drop me a line and I'm happy to facilitate introductions with a highly capable lender.
And, by the way, regarding that that long-asked question about which came first,
The Mother Nature Network
offers a brilliantly scientific answer:
"In a nutshell (or an eggshell, if you like), two birds that weren't really chickens created a chicken egg, and hence, we have an answer: The egg came first, and then it hatched a chicken. Maybe the question we should be asking is: Which came first, the proto-chicken or the proto-chicken egg?"