When it comes to buying and selling real estate, timing your transition between homes is crucial, and it can be one of the trickiest parts of the whole process.
Close of Escrow (COE) is the date when home ownership transfers from the seller to the buyer. If you’re the seller, it’s the day you’re supposed to be out of your house, unless you negotiate otherwise. The closing process varies by location, but generally speaking, financed deals require 45 days from when you put your property under contract to the day you get your proceeds. As a seller, this puts a time constraint on you.
Closing your home sale on time relies on multiple factors—including how fast your buyer’s lender likes to work—and the timeline is not always predictable. The process can take longer than it’s supposed to, and there are a lot of moving parts, so it’s important to plan ahead and have a strategy in place.
As a seller, there are usually three options to choose from as you plan your transition into a new home.
Scenario 1: Buy, Move, then Sell
In an ideal world, you’d have the ability to buy a new house and move into it before you sell. If you can get the timing and cash flow to work out, this is the easiest way to do things. By moving out and leaving your home partially furnished and staged, you ensure that the home is always ready to show. No need to worry about getting the kids out of the house, booking a kennel for your dog, or cleaning up the little messes that gather from living in your home.
Of course, this type of transition is not always practical, but if you can afford to do it, it’s usually the best option. Even so, many people prefer to sell their home before they buy a new one.
Scenario 2: Sell, Buy, then Move
Escrow is a laborious and time-consuming process that both you and your buyer have to go through when you’re selling your home. If your plan is to only move once, but you need your current home to close before you can close on your new home, this will require more strategy because there are now two escrows to manage. However, this is easier said than done.
Before escrow can close on the sale of your home, all the terms of the purchase contract must be met. These long lists of conditions include: earnest money deposit, fulfillment of seller obligations, completion of buyer inspections, appraisal by the lender’s appraiser, and much more. Some items can be waived, others are strictly necessary. It all depends on the terms of the deal. These terms have to be met before you sign the deed or the buyer deposits the remaining balance of their down payment. The process requires inspections, signatures, and notaries—which all take time.
With all the hoops both parties have to jump through, getting timelines to match up on the closing of two escrows is no easy task. For example, imagine that your home sale went into contract on January 1st and the closing date is February 15th. Two weeks later, it’s mid-January and you’re finally going into contract on your new home purchase. In this scenario, the buyer of your home wants you out by February 15th, but escrow won’t close on your new home until the end of February at the earliest—provided that you’re getting a loan and have a similar 45-day wait. If you can pay cash for your new home, this gives you more flexibility. But if the closing dates don’t match up, this creates the problem of where to live in the meantime.
The best option is to make a deal with the buyer of your home. Sometimes you can get a couple days to one week for free, or maybe they’ll let you lease it back for a month or two. Usually the longer lease you and your agent can negotiate for, the better. The tricky thing is that you need to negotiate this lease back ahead of time as part of your sale. Sellers don’t always like the idea of paying to lease back their own home, but the truth is you have to pay to live somewhere. This small investment will give you more flexibility and room to breathe should something go awry. If you can negotiate a lease back, it gives you a buffer and should prevent you from having to go with the third scenario…
Scenario 3: Move Twice
No matter what your situation is or how hard you try to negotiate for a lease back, some buyers just want you out. They’re eager to move into their new home, and they just don’t want to wait. If they’re buying with cash instead of a loan, they may want to close in 30 days or less, which gives you even less time to figure out a plan.
In this case you’d need to find a transitional property to live in, whether it’s a short-term rental or the house of a family member or friend. Moving is never pleasant, especially when you have to do it twice in a short period of time, but it is possible to ease this burden by storing your stuff in moving containers using companies like Pods.
Sometimes moving twice is the only option, but if you really don’t want to do it, then you have to communicate and strategize with your agent far in advance.
Strategize with Your Agent
As you’ve seen, this whole juggling act can be long and complicated, which is a good reason to have your real estate agent help you with the planning. Have conversations with your agent about timing, strategy, and what you’re trying to accomplish. Usually, the main goal for sellers is to earn the highest price in the shortest time possible with the least amount of headache, but there can still be more to that. There can be a lot more.
Honest communication is the key to working together for the best results. This is especially true if you’re planning on moving to a new city. If you have to coordinate closing dates in two different cities, both of your agents should have a conversation. Preferably, this should happen before you go into contract on your purchase. They should also keep each other updated on anything that might disrupt the timeline.
So talk to your real estate agent. Share what your goals are. Do you have to sell, or is there a plan B? Say what’s on your mind, and don’t be afraid to give full disclosure, because the more your agent knows about your timing and what’s important to you, the more they can work with you and give you better advice for a smooth transition.