Today we’re talking about an effective and creative strategy for buying & selling at the same time. Depending on your situation, this may be an option for you. Either way, you need solid market knowledge and an experienced Realtor to help you navigate buying and selling a home at the same time.
Sellers who want to use their home equity in order to buy – you are in a strong position because inventory is at a record low in Lincoln Park and the surrounding neighborhoods and buyers are willing to offer concessions upfront for the right home. Let the market know you want to rent back. This is called a possession agreement. The home will close, the seller gets their equity and stays in the home for up to 60 days.
A form of a security deposit will be held back until possession is delivered, our Chicago contract calls for 2% of the purchase price.
At closing, the seller pays a daily rate to rent back the home. This rate is PITI which stands for Principal Interest Tax and Insurance. There is no additional cost to the buyer with a possession agreement because the buyer is compensated based on the cost of ownership and the “security deposit” is released when Possession is delivered.
This lever is not entirely common in Illinois but has become more prevalent because it offers flexibility to the seller and helps the buyer differentiate their offer to make it more appealing.
For buyers, this could work well because it could give them extra time to sell their existing homes.
If you are considering moving in this market, or are just curious; we’re here for you.
There are many creative ways to approach the process. I’ve seen all kinds of variations this year already, and it’s only February!