January 06, 2022

Selling your old home doesn't need to stop you from buying your next one

By Houwzer

Houwzer/for PhillyVoice

As the battle for available homes has intensified, buyers across the board are struggling to find a way to win the home they want. Even existing homeowners – who want to take advantage of their surging home value – can’t seem to land their next home.

Of course, in a market like this, no one wants to sell their current home without having their next place lined up. And this only exacerbates the issue – as people sit on their homes, new inventory never comes to the market and the growing backlog of buyers fight over scraps.

Homeowners trying to buy their next home first are running into another roadblock: unless they can take on two mortgages or offer cash, they need to add a home sale contingency to their offer.

But contingent offers often lose in bidding wars because sellers want to avoid complications.

Tired of seeing homeowners get stuck, one modern real estate company is offering a solution. Houwzer’s new Buy Before You Sell product lets their clients use the company’s cash to win the bidding war on their next home, while letting them sell their old one later.

So how does Buy Before You Sell will help homeowners succeed in this market? Houwzer’s CEO Mike Maher spilled the details in this recent Q&A.

1. Let’s start with the basics. How does the Buy Before You Sell product work?

First, a Houwzer listing expert will evaluate your current home and give you what we call a “Convenience Offer”. This is essentially a "backup" offer that you can choose to accept at any point, which provides assurance that your home will sell.

Once you’re approved, Houwzer will help you access your existing equity early and loan you the money to buy your next home in cash. A Houwzer Buyer Agent will help you find the right home, write up a compelling cash offer, and handle negotiations. As soon as your offer is accepted, you can list your old home or hold off until you've moved out.

Whenever you’re ready, our listing team will work to sell your old home for top dollar. Once the home is sold, you can use the proceeds to pay off the short term loan – or pocket the cash.

You’ll have 45 days after closing on your new home before you'll start paying interest on the money you've borrowed. A Houwzer Mortgage Advisor can help you set up a mortgage on your new home that can be used to pay back the short-term loan we gave you for the new home purchase.

2. Why are cash offers more appealing to sellers? How does borrowing Houwzer’s cash increase the odds of winning the home?

Cash is king. All-cash offers are highly preferred by home sellers because of the speed, ease, and certainty. Many sellers in this market already are going to make good money on their home – what they’re looking for is the easiest path to settlement. Cash is that easy path. The money is often ready to go, there’s no mortgage company to potentially complicate anything, and they rarely fall through. It’s so appealing that sellers will often accept a lower offer if the offer is in cash.

All too often, single family homes are purchased by developers or 'Wall Street' who have the unfair advantage of cash on hand. Now our buyers will have the same opportunity that has always been limited to those with liquidity.

3. For most people, the worst part of selling your old home and buying a new one is the stress and uncertainty. It seems like Buy Before You Sell removes some of that, correct?

Yes, it helps alleviate both. The Convenience Offer gives you the comfort of having an offer in hand. You know that, at a minimum, you’re going to be able to sell the home for that price.

It takes a lot of the stress out of trying to line up the home sale and purchase just right. Real estate transactions have a lot of moving parts and when you go the traditional route of selling first, there’s a very real risk of hiccups and unforeseen circumstances that leave you scrambling for a place to live in the interim. Buy Before You Sell gives you the ability to figure out where you’re going and move into your next place on your own timeline without stressing about when you have to be out.

And of course, you’ll avoid the hassle of selling a home while you’re living in it. You won't have to deal with rounding up the family every time there's a showing request – or panicking because you left dishes on the counter.

4. Let’s talk about the sell side. Do homeowners who use Buy Before You Sell still get the full service experience on the home they’re selling?

Yes, absolutely — our team is beside you every step of the way, from the initial consultation to the closing table. Sellers still get a lockbox, sign, virtual tour, HD pictures and video, open houses, access to Houwzer’s listing dashboard, and are listed on all major platforms including the MLS, Zillow, and Realtor.com. The difference is in the cost of our services. Traditional brokerages charge sellers a 3% listing fee, plus a 3% buyer agent fee. At Houwzer, we provide full service listings for a flat $5,000 fee, plus 2.5% to the buyer’s agent. This saves our home sellers an average of $15,000 in commissions alone.

5. How are you able to charge so little for your listing services?

It just doesn’t cost 6%, or even 3%, to sell a home. This surprises people who have always been told they need to pay a big commission to get full service. Our workforce is made up of salaried employees. Technology and specialization make the engine run more efficiently. These simple changes implemented at scale give us the freedom to reduce fees where other brokerages can’t or won’t. A flat $5,000 covers the cost of marketing a home and allows us to pay our agents well, while still saving money for consumers.

6. What if their old home doesn’t sell?

We give our clients a Convenience Offer on their old home up front to give clients assurance that their home will sell. This is essentially a "backup" offer that they can choose to accept at any point – they can take it right away if they don’t want to wait, or they can take it later if they don’t receive a better offer on the market. Most sellers will probably never use it because the market is so hot.

7. What does Buy Before You Sell cost?

We charge a flat $5,000 to borrow our cash to buy your next home.

We treat the home sale like any other listing client. We only charge a flat $5,000 listing fee to sell your old home, plus 2.5% to pay the buyer's agent. We differ from traditional brokerages here – other brokerages charge sellers a 6% commission which is split between the listing and buyer brokerages.

Houwzer