Why today’s sellers need a Plan B

Key insights:

• The market is great for sellers, but headlines overlook how sellers-turned-buyers may have a hard time finding a house in a limited time frame.
• By setting up a Plan A, which includes smart budgeting and strategic negotiation, sellers may be able to properly time their home purchase.
• If timing doesn’t align, having a Plan B with temporary housing can help sellers minimize stress as they continue their long-term search for the perfect home.

You’ve seen the headlines saying what a great time it is to sell. “Inventory is tight and prices are rising. List now to sell fast and for a great price!” But this leaves many sellers wondering, “What happens when I sell my home fast… and then enter the market as a buyer?”

It’s a good question, and one you’ll have to answer for yourself. What we can tell you, after helping thousands of Minnesota and Wisconsin homeowners sell their homes this year, is that if you work smartly and set yourself up with both a “Plan A” and a “Plan B,” you’ll be well-equipped to face today’s imbalanced market.

Here are some insights on how to do just that.

Aim for Plan A: Budget and proceed with confidence

When selling your home, you’ll want to work with a REALTOR® who understands the current marketplace and how to work with sellers who also need to find a new home to purchase.

Set a budget for your next home

First, your agent can help you get pre-approved with a home mortgage consultant. A pre-approval is a lender’s estimate of how much you can afford to buy. Together with your agent’s estimate of your home’s value, you can begin creating the right budget parameters for your future home search.

Take control of the timeline

As a seller today, you hold the advantage. That means you have a few options when it comes to your timeline for closing and moving. Once you’ve listed your home and gotten a solid offer, you can:

• Request a slower closing timeline from your buyer, which will allow you more time to find a new property.
• Ask the buyer if you can lease back your home for 1-2 months as you search for a new property. Some buyers may resist this, while others may agree to a quicker closing and slower moving date.
• Include a reverse contingency in the purchase agreement, which states that your home sale is contingent upon your finding another home to buy.

However, keep in mind that buyers nationwide searched on average for eight weeks before they found the home they purchased in 2020. Even the most understanding buyer may not be willing to wait that long. If you end up in a position where you have a pending home sale, but not a pending home purchase, it’s time to move on to Plan B.

Plan B: Have temporary housing available

When you’ve sold your house but haven’t found the right one to move into, consider your transitional housing options. Home buyers often report that finding an alternative place to stay helps them reduce their stress and focus on their long-term housing needs.

Together, you and your agent can come up with the best temporary housing plan for you and your family. This may be:

• Renting a single-family home or townhome on a short-term basis.
• Renting an apartment month-to-month.
• Staying at an “extended stay” hotel or inn, which typically has a kitchen area.
• Staying with friends or family who have extra space.

Remember, a great real estate agent shouldn’t just be laser-focused on finding you the right home. As they prioritize your home search, they should also work in tandem to help you find a soft (and temporary) place to land even if Plan A goes awry.

Need help developing your Plan A and Plan B?

Edina Realty agents help hundreds of sellers make important decisions about timing, budgeting and negotiations each day. Contact Edina Realty or your agent to get help with the selling process.