Options for buying now and selling later

You don’t have to be made of money to own two homes for a short period of time. Ideally a buyer would be in a position to take advantage of this current market weakness by buying their new home without having to first sell their current home. There are a few reasons why this is beneficial. First, I believe we are somewhere close to a local real estate market bottom and by June of next year we should see things perk up. Why do I think this? Because I believe mortgage rates will come down and mortgage loans will be easier to obtain. For more of my thoughts on this subject see my blog post titled “Why I believe mortgage rates will fall during the coming year”. Below I have outlined one of many possible strategies for buying into the current weakness and selling into whatever strength we have after the first of the year or even the spring.
Buy now with a long escrow period and sell later this spring: Some sellers do not have to actually move, rather they need the money. In these instances, sellers will sometimes be willing to give you a multi-month escrow but will require that some of your down payment flow through escrow directly to the seller to help them with their immediate financial needs. These funds are non-refundable but do become part of the down payment. If for some reason you do not follow through with the transaction, you may be liable for actual damages to the seller in the event he ends up selling his home for less than he was going to sell it to you. This holds true for all real estate transactions but in normal transactions you have to work with the title company (not the seller) to get your money back. You need not fear, there are lots of protections built into this process. In the end, if you find a home you love and are 100% you want it, there is no risk to a long escrow with a premature release of funds to the seller. This long escrow period also gives you more time to prepare your current home for sale not to mention you avoid the unpleasantness of having to sell your home in this slow-moving market.

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Have any of you tried any of these tips? If so let me know how it worked out.