When you envision the process of selling your home and buying a new property, you likely imagine synchronizing the sale with the purchase so that both close at nearly the same time. Only a fortunate few homeowners enjoy this level of perfect serendipity. What usually happens instead is that either your buyer or the seller of your new home will complete their transaction well ahead of the other—in fact, one of the transactions may not have even begun before the other closes! With this possibility in mind, let’s examine the options available to you as you work to juggle the many complexities you and your buyer may face.

The advantage to being the seller whose home sells before you’ve purchased a new home is that you won’t have to be responsible for two mortgages and two sets of homeowners insurance. What’s more, you will have a concrete sum available to you as you place offers. While the practical problem of temporary residence can be inconvenient, the benefit of not having to include your eventual home sale as a contingency will more than offset this small hiccup.

Still, the following solutions are commonly pursued by homeowners who must find short-term housing.

Leaseback Agreement

The simplest, most advantageous option for you as the seller is the leaseback (or rent-back, sale-leaseback, or post-closing possession agreement). Once you have closed on the sale of your home, a leaseback agreement will make you a temporary renter of the property until you have purchased a new home of your own. Your rent will cover the new mortgage payment (for your buyer) and will be mutually beneficial to a buyer who is still working to close on their current residence. Such scenarios aren’t unusual; in fact, a leaseback agreement is reached in one quarter of home sales each year.

The Leaseback Agreement from the Buyer’s Perspective

The market today is decidedly a seller’s market. A buyer who is facing stiff competition in their efforts to purchase a home can gain an edge over other bidders by agreeing to a leaseback agreement. If you’re a buyer who is working to coax a homeowner to sell a property, and they’re on the fence, you can bring up your willingness to arrange a favorable leaseback agreement. This will remove the pressure involved with the process of purchasing a new home, which everyone appreciates in a hot seller’s market!

How to Execute a Fair Leaseback Agreement

A fair leaseback is self-limiting, which means you as the seller will not be able to extend your tenancy indefinitely. You are responsible for taking this option only if you’re sure you can close on a new home in short order. Otherwise, you run the risk of putting the new owner in the position you currently hold—that is, leaving them with nowhere to live once their home has sold.

A first-time buyer may be able to extend their own tenancy in tandem with yours, in which case you may find that you have a bit more flexibility. Otherwise, you must be able to place a competitive offer promptly and surrender the home to the new owner.

Work With an Expert

It is inadvisable for you and your buyer to write up a leaseback agreement. Instead, hire a real estate agent, broker, or real estate attorney you both trust to write the agreement. Your lease writer will ensure that both parties’ financial interests are protected by including clauses that outline the requirements regarding rent, deposit, renter’s insurance, pet policy, and expectation regarding payment of utilities, maintenance costs, and execution of minor repairs.

A Short-Term Rental

If you’re willing to move twice, you may wish to rent a home or apartment on a month-to-month basis. You may choose to keep the bulk of your belongings in storage, using your rental as an extended-stay hotel rather than fully moving in, or you may wish to save money by bringing everything into your rental.

Having a secure, private, and quiet base of operations as you shop for your new home can do wonders for your mental health, but this benefit may be more than offset by the hassle of moving twice.

Friends and Family

If you are a single person or child-free couple whose delay in purchasing a home is brief, you may have friends or family members who can open their guest room to you. This option may be free, but the downside could include strain on a vital relationship with a loved one. For this reason, only the shortest of stays will make this option worth the risk. Where there is risk of further delay, we cannot recommend intruding—even when the invitation has been extended.

Work as a House Sitter

If you have enough time to prepare, you may be able to work for a company that places house sitters with homeowners who will be away. This arrangement may offer complimentary housing, or it may even include some additional income. Still, housesitting is competitive, and cannot be arranged on short notice. If you are searching for a home for a family, or have pets, this avenue is not an option.

Buying and selling homes is stressful. It’s hard work from either perspective and rarely flows with perfect synchronicity. If you want reliable assistance as you navigate these rough waters, reach out to one of our highly experienced Parks Realtors®. We’re happy to help you find the right solution as you continue to search for your new home.