Move-Up Selling

The last row is the one people expect to use and the one that works least often. In a market with several offers on the good homes, a seller comparing a clean offer against one that depends on somebody else's house selling will take the clean one almost every time, even at a lower price.

Which leaves most Orange County move-ups choosing between the middle two, and that choice is about temperament as much as arithmetic.

A well-priced home in a good tract here will find a buyer. The four-bedroom with the yard in the school attendance area you want may come up twice a year. That asymmetry is the whole problem with the tidy sell-first plan, because it assumes both halves take a similar amount of time and they do not.

Our honest read: if your requirements are specific, buy first and accept the carrying cost as the price of not missing it. If you would be happy in any of fifteen homes, sell first and save the money. Most people know which of those they are and talk themselves out of it.

That is the constraint that decides whether buying first is available to you at all, and it is the first thing to establish rather than the last. Some buyers qualify comfortably carrying both; many do not, and finding out after you have fallen for a house is a bad afternoon.

There are ways around it, and they are worth asking your lender about specifically: bridge financing against your current equity, using documented rent from the departing home in some circumstances, or a larger down payment that brings the new payment down. All of them take arranging in advance.

An offer contingent on your sale gives the seller a right to keep marketing and to ask you to remove the contingency if a better offer arrives, usually within a couple of days. Understand that before you rely on it, because the protection is real but it is not the same as certainty.

What makes it acceptable to a seller is progress. A home that is already in escrow with contingencies removed is a very different proposition from a home that has not been listed. If a contingent offer is your plan, get your own sale as far along as possible before you write it.

The withholding line is the one that ruins move-up arithmetic, because it is taken from the sale price rather than the profit and it leaves with the escrow. If you qualify for an exemption and certify it before closing, it never goes, which can be the difference between the down payment you planned and the one you actually have.

Do this calculation before you make an offer on the next home rather than after. It is the single most common reason a move-up buyer has to renegotiate their purchase.

It takes coordination rather than luck. Both escrows have to be ready at the same time, your purchase signing has to account for the three business day wait after your closing disclosure, and the sale has to fund before the purchase can. Any one of those slipping moves the whole day.

What we do about it is unglamorous and it is most of the job: the two escrow officers talking to each other from the start, the two lenders aware of the sequence, and a fallback agreed in advance for what happens if the sale funds late. Same-day closings fail when nobody decided who was watching the ordering of them.

From the moment escrow closes you are living there as the new owner's tenant under a written agreement, at a rent the two of you negotiate, and there is a length beyond which the arrangement changes character and gets more complicated. Keep it short and keep it written.

Sellers underestimate how willing buyers are to agree to it. A buyer competing for a home will often take a rent-back happily because it costs them little, and asking for one is free. It turns sell-first from a plan that risks temporary housing into one that usually does not.

Under 55, budget for the new home's tax on the purchase price rather than anything the seller was paying, plus a supplemental bill some months after closing covering the rest of the tax year.

At 55 or over the position is much better than most people assume, because buying up does not disqualify you: you keep your old taxable value and add only the amount by which the new home exceeds the old one's value. It is worth reading the detail on our downsizing page, which covers the whole thing, because it applies to a move-up just as much and the eligibility is measured on the day your current home closes.

The order that goes wrong is the intuitive one: list, get an offer, panic, and buy whatever is available inside the escrow. That produces the two worst outcomes in a move-up, which are overpaying for the next home and taking a weaker offer on the current one because you now need the timing.

The order that works: lender conversation first so you know which routes are open, then the proceeds calculation, then the search, then the listing, timed so the sale is progressing while you are looking rather than after. It is slower to start and it is the version where you keep both your leverage and your choices.