Sell a House to Buy a House
March 31, 2017 12:13 PM   Subscribe

I plan to sell my condo (no mortgage) in order to buy a house of similar value in cash. I cannot afford the house without selling the condo. I have been denied any kind of financial assistance by my bank due to being unemployed. How do I make this work? Ontario, Canada

I live in Ontario, Canada.

I own a condo in full (mortgage paid off) that is worth ~150K. I would like to sell this condo and buy a house of similar value (+/- 10K). I have ~75K in savings. I have no income* so I do not qualify for a mortgage or a loan (spoke to the bank today and they will give me nothing; I have no family willing to co-sign).

I am confused as to how the logistics of this would work. What is the order of events in this situation?

Is it possible to: A) list my condo, wait for an offer that I accept, let them fulfill their conditions (so it's "sold firm"), and then go find a house I like, put in an offer with a condition that my condo must sell/close**, and try to put the house closing date as soon after the condo closing date as possible?

Or do I need to B) wait for my condo to close before I can put an offer in on any houses?

Or C) some other option I haven't considered?

Any help is appreciated!


* My plan is to go into dog boarding but I cannot do that from the condo.
** I know that an offer with such a condition is less appealing to sellers but I am looking at moving more rural where it is more of a buyer's market (houses sometimes sit on the market for a year or more) so hopefully that won't be too much of an issue.
posted by buteo to Work & Money (15 answers total)
 
Put your condo on the market. While it is being shown start to look around at houses and neighborhoods that interest you. If you get an offer, accept it, and arrange a closing date. If you're very lucky, maybe the right house will become available. More likely, it won't. So put your furniture in storage, get a sublet and narrow your choices down. You are now that most desired of buyers--an all-cash buyer.
posted by Elsie at 12:20 PM on March 31, 2017 [6 favorites]


You might be able to put a contingency into the purchase contract of a new place that says your old place must close.

Since you're paying cash, the time you can go from signed documents to a closing should only be bound by inspections and such, as there's not the mortgage hoopla. (based on my USA experience; i'm guessing CA is roughly similar)

However, you might want to consider a short term lease to bridge the gap to avoid unnecessary stress - I think having the contingency would be extra hassle. Closing your sale prior to starting a purchase might be best overall. If it were me, I'd probably try to do that for my family.
posted by osi at 12:20 PM on March 31, 2017 [1 favorite]


Best answer: I am in Quebec, but an offer conditional on the buyer selling their house by a certain date is quite common. Provided the seller agrees, and the conditional offer is correctly done, your offer is locked in until the sell-by date passes. If you don't sell in the time period, you just walk away.
posted by cardboard at 12:24 PM on March 31, 2017 [1 favorite]


Sell the condo first, and look for houses as much as you can in the meantime.

When you close on your condo, put your stuff in storage, and stay with a friend or family member or rent a short term rental (ex. a sublet, or an Airbnb room) until you have a closing date set for a house. There is no need to tell anyone that you just sold a condo, if the timing allows you to not go into this. Just present yourself as an all cash buyer who will be in a position to move after X date.

IMO, selling the condo ASAP will help make you an attractive cash buyer with better negotiation power anyway. Sellers don't like contingencies - the more working parts and timing there is that can possibly go wrong, the more anxious they get about it.
posted by zdravo at 12:29 PM on March 31, 2017 [3 favorites]


Depending on your market(s) and budget, you could also try to get a rent-back clause in the condo contract, in which you rent the condo from the new owners for a short amount of time. That would give you less time than finding an unrelated rental, but you also wouldn't have to store or move your stuff until you had the house. It worked out really well for us in the hot San Diego market a few months ago, but YMMV.
posted by natabat at 12:34 PM on March 31, 2017 [1 favorite]


I agree with others to get the cash in hand, then buy the house all-cash. Also, in the US at least, you would want to complete both transactions within the same calendar year to avoid possibly paying capital gains on the money you get from the condo.
posted by OrangeDisk at 12:35 PM on March 31, 2017


Best case is to sell the condo, get the cash in hand, then begin the buying process. This makes you the most desirable buyer, because there would be no loan or selling contingencies. You could begin looking during the selling process, but make no offers until you have the cash in hand. This is inconvenient for you because you would need to move twice, put stuff in storage etc.

However, you say that the area you are looking is a buyer's market with many houses sitting for a long period. This suggests that there may not be any competition for a house you might want to put an offer on, in which case you can go ahead and put your condo on the market and begin looking. Once you receive an offer on your condo and the process is underway, you can put an offer on a house you like, with a selling contingency for your condo. However, what is the market state for your condo? Are you confident it would sell fast?

Alternately you can add a leaseback clause to your condo sale, so you can stay there while you secure the house. This is risky if you don't have your ducks lined up with a house in process to move to, because a leaseback clause typically needs a firm end date (unless your buyer has no firm plans for moving, rare).
posted by Joh at 12:52 PM on March 31, 2017


Best answer: cardboard has it. This is typically known as a conditional offer, with the condition being you are able to sell your home before the deal to purchase the new one is finalized. They are extremely common.

https://www.royallepagebinder.com/buyer-article-23/elements-of-an-offer-to-purchase
http://mmteam.ca/sellers/should-i-sell-my-house-first-before-i-buy-or-vice-versa/
(Yes, those are real estate sites, but they outline the basics.)
posted by sardonyx at 1:03 PM on March 31, 2017 [1 favorite]


BTW most moving companies offer storage as well. So if your sell and purchase dates don't sync up the moving company can hold your stuff for a short period fairly cost effectively vs renting storage separately. And you only pay one moving fee generally.
posted by Mitheral at 6:45 PM on March 31, 2017


Response by poster: Thanks for all the answers so far!

A few points:

- I have no friends or family that I can stay with, and I have 2 cats + 2 dogs so short term rentals would be difficult (and no airbnb will take us lol). As such, I am strongly motivated to limit that whole part of the "wait until it's sold with cash in hand before putting in any offers" strategy.
- My condo will be a hard sell, the condo market is oversaturated, and the building was financially mismanaged and not updated since construction in 1987. Previous units have sat on the market for 3-6+ months before selling (compared to the housing market where houses are selling within a week or two).

I have absolutely no intentions of putting in an offer on a house before I have a signed sold agreement for my condo. It sounds like that and a "conditional on sale of existing property" clause enough should be enough to cover me. Is that correct?
posted by buteo at 7:35 PM on March 31, 2017


Essentially, yes.

You need a good real estate agent. You need to sit down with the agent and explain the situation: you want to buy a new property, you will finance it with the proceeds of the sale of your condo. You cannot go forward with the new purchase until your condo sale happens. This should motivate the agent to get off their rear end and find you a buyer, even though that could be difficult.

Given what you've said about the market you want to buy into, and what you've said about your condo, you should be okay. It's not as if you're buying into a hot market and selling in a cold one. In both cases, you talk about sales taking many months so things should balance out relatively well.

The biggest challenge I see you having is finding an agent who would be willing to work outside of the GTA to find you the country property. A lot of Toronto people don't like to travel. If you encounter that, try a big provincial or national agency--maybe your local agent can refer you to a colleague in a different branch office.
posted by sardonyx at 8:00 PM on March 31, 2017


I should clarify: usually these types of conditional sales happen on the same date. So on April 30th you close the sale of your condo, and also on April 30th, you take possession of your new place. If it sounds complicated, it is and it's not--it's done all the time.

Happy house hunting!
posted by sardonyx at 8:03 PM on March 31, 2017


Best answer: Do not use the same agent to sell your house and shop for the new one. You really need local people for both transactions. I admit I'm curious where you are moving that has such a depressed real estate market AND a population that can afoord boarding. I'm in rural Ontario and the GTA bubble is affecting us even way out here. Check that the local municipality isn't going to throw roadblocks at yu setting up your business. There are a few municiapalities that have a well-deserved reputation for crankiness and the "old boys club" (ugh) that may not be apparent to an outsider.

You can definitely have the condo close in the morning and get the keys to your new place in the afternoon, that is how most transactions I am familiar with happen.

Good luck! This sounds like an exciting time for you!
posted by saucysault at 11:21 PM on March 31, 2017


Response by poster: Thanks everyone! That answers my question.
posted by buteo at 9:04 AM on April 1, 2017


Re. (C) -- I wish our residences were closer in value; I live in a rural area outside Ottawa, in a house that was on the market for about a year before I bought it -- quite normal for the area. Every now and then I get an itch to move back to the city. But the complications of having a low income and being in an area where houses take forever to sell -- and having pets and a kid -- make this an overwhelming prospect.

IF I saw a flyer on one of the local bulletin boards out here with someone in the city with the sort of city property I wanted, who was looking to do an outright swap for my sort of house, I would probably be e-mailing them that evening. It's hard to move out of the sticks once you're there given the market conditions you mention, and there are certainly elderly folk, homesick city folk, etc, who would love to dispense with so many real estate hassles, rural maintenance hassles, etc, and just up and swap homes. It might be worth posting on local FB/Kijiji/etc and putting flyers up in post offices and community centres in the areas you'd like to move to outside of the city.

(Side note: beware of parts of the Ottawa Valley where the industry that created the town has up and gone, as taking in/grooming/etc pets is...there seems to be a sign advertising it in front of every second once-gorgeous dilapidated Smiths Falls house; you will want to be near the 417 and somewhat isolated and not in a town with a lot of kennel competition -- you have probably already considered that, apologies. Lots of desperation lurks in some areas for work out here, though. Arnprior residents keep hoping for a Walmart not entirely for shopping, but also because the town is so short on jobs that even minimum wage at a lousy employer appeals in 2017. All that crap out of the way, I know a person who does wonderfully with her dog business in Carp -- she's close enough to Ottawa to get city clients, rural enough to have a massive yard.)
posted by kmennie at 10:30 PM on April 1, 2017 [2 favorites]


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