Moving to new construction can be an extremely exciting time, especially with the gorgeous homes in Playa Vista Phase II. So it’s all unicorns and roses, right? Well, almost… With every move there are potential stressors. I’ve found with new construction, timing can be one of your biggest challenges. Specifically, timing the sale of your current home with your new home’s ever changing construction schedule.
With this post I’ll go through some of the options my clients have considered and used to time their moves to Playa Vista Phase II.
Please note that delayed construction can throw a wrench into even the best laid plans for your move. Below you’ll find some strategies with pros and cons that can get you started in the right direction. We suggest consulting with your Realtor and Loan Officer to develop a solution unique to your situation.
Buying contingent upon selling your current residence
Many buyers use equity from their current home to put towards their new purchase and/or are required to sell in order to qualify for another mortgage. When buying contingent, the builder may require you to put your home on the market within days after signing the purchase contract. Here are a couple strategies for contingent buyers.
Sell, Rent and Store – Once you sign your new construction purchase contract it’s time to list your home. The time you have to sell and the length of your upcoming lease will depend on the stage of construction your new home is in when you sign the contract. For example I am working with clients that have 5 months of construction left and others who have only had a month.
- This strategy can allow for plenty of time to sell your home. More time can help remove the added stress of having to sell quickly which can help bring a higher price for your home.
- You can negotiate a longer escrow period to cut down on the amount of time you need to rent.
- There are relatively affordable and decent rental options in and around Playa Vista.
- Potentially you can lower your monthly expenses for a few months.
- You will be moving twice and in a relatively short period of time (2-6 months).
- You’ll probably be renting a smaller space than you are used to living in.
- Two moves comes along with the expense of movers and storing your stuff.
- It’s always possible that your home won’t be ready when your short-term lease is up. In some cases the landlord may charge a higher rate if your stay is extended.
Selling with a Leaseback – A Leaseback allows you to set-up a short-term lease where you rent the property back from your buyer for an agreed upon monthly rate and time period. The time period begins after close of escrow. Two keys to pulling this off are finding the right buyer and, ideally, timing your move within 90 days of your new construction move-in date.
- You can stay in the same place until your new home is ready!
- Move once and forget about having to store your furniture.
- Most buyers want to take possession at the close of escrow. This strategy works best if there is competition for your home.
- This plan can reduce the buyer pool which can result in a lower selling price.
- It’s possible your new home won’t be ready within the leaseback period. *A resolution for this situation should be negotiated up front.
Most builders give a higher priority to non-contingent buyers. Although, I am currently working with contingent buyers that have been assured by the builder that there is nothing to worry about. Here is an example of a disclosure statement from the Camden builder, Brookfield Residential: *Homes will be sold based on priority order with non-contingent purchases receiving priority over contingent buyers.
If you are able to qualify for your new home without selling your current property then you have more options.
Perfect timing – In Utopia this is how it happens every time. You get a move in date from your builder a few months out, your home goes on the market and then your escrow period lines up perfectly for all parties involved. Bam!
The obvious “con” here is having to pay for two homes if everything doesn’t line up perfectly. It’s important to be prepared to pay on two homes for a month or two. If you are selling in the current market in Playa Vista or the surrounding areas, homes sales are going pretty quickly. Many of my clients’ homes have been selling quickly, above list and with multiple offers.
Turn your current home into a rental property – This can be a short or long-term decision. There are a lot of variables in play here, but this could be a good investment to consider. If you happen to live in Playa Vista, the rental market is going up and so are the home prices. It may make sense to rent out your current residence for a year or two and then sell, or keep it as a long-term rental.
As far as timing to rent your home, I suggest advertising your property 45 days prior to your new construction move-in date.
You have options. Whether you are buying contingent or non-contingent there are plenty of strategies for timing your move and getting the most out of your investment. We have gone through a few of the many options available to you. If you wish, I am available to discuss your plans and provide some direction.