In my entire career, if there’s one constant source of frustration for both the agents and every lender, it’s a seller saying,” We won’t list this home for sale—until we find our next home.”
That objection is straightforward to understand and a valid point of view.
I (personally) want ice cream to come in the mail, not make me fat, and for my girlfriend to serve it to me every morning. Has yet to happen!
So, the dilemma for every “would-be” listing agent is how to overcome this universal objection.
Below is a list (courtesy of Inman) of EVERY response an agent can counter to put their seller’s mind at ease. Responses are in italics.”
Inman does not list an author for the following post, which is a survey of the most common seller’s objections.
Inman: Ways to Deal With
‘We Won’t List Until We Find a Home.”
Recently, Inman surveyed readers to find their best responses to sellers who say, “We won’t list until we find a home.”
Inman readers (your colleagues) shared a laundry list of ways to rectify it.
There are 38 responses, and you will probably need to memorize them all, as their fear is so intense!
Inman’s readers also suggested several workarounds, including particular contingencies, bridge loans, and renting.
Editor’s Note: For lending on a primary residence using “bridge loans” to buy another home before a seller’s current house is sold, it is a myth.
Why? Just for starters: How many of your clients can qualify for both homes (no rental income for the house getting the bridge loan; and has enough of a down payment for the new home, with no seller proceeds available from the sale of their current residence home). Virtually none!
Secondly, “Bridge loans (aka ‘hard money’ loans) are NOT an option for buying ANY primary residence due to ‘Dodd-Frank.
Here are some of their favorite responses to this common objection.
“Then you might sell your home for less.”
1) If you wait until you find that perfect home, you might have to sell your home for less for a “quick escrow” because you don’t want to lose the house you found.
2) Unless you can buy without a home sale contingency, having your home ready for sale and on the market is critical to secure your next purchase.
3) Our listing agreement encompasses prep time, getting photos, and staging if necessary. Don’t you want to know what you must work with in the sell-side?
4) Making an offer contingent on selling your home puts you at the bottom of the heap in the event of multiple buyers.
Similarly, you will be in a relatively weak position when negotiating your own sale price and when dealing with repairs/appraisal, all due to the pressure from timelines you invite by entering into a contingent purchase.
Consider Unconventional Contingencies
5) You can list now and require the buyer of your home to include a seller condition. Their offer is contingent until you find a home.
6) Encourage listing their home and assure them we can counter with a reverse contingency if we receive an offer.
We can make the contract contingent on the seller finding a suitable property by a specific date agreeable to the buyer. We can terminate the contract if they don’t find a home.
7) Include a contingency that the seller finds an acceptable replacement property, and the buyer will adjust the contract dates accordingly.
8) Tell the seller they can require a “seller kick-out clause” in any negotiated contract, allowing the seller to terminate or extend the agreement if they cannot find a home within “X” days of the agreement date.
9) List your home; in the listing, we state that “the seller is on the hunt for their replacement home and would like a post-closing occupancy agreement otherwise known as a ‘rent back.”
This allows the seller to stay in your home for up to 60 days while you contract your new home. Some buyers may be in a similar situation and would be flexible on their move-in date.
10) Tell your seller they can list their home and look for one by putting a Hubbard Clause into the sales and purchase agreement when they find a home to write an offer.
This gives them the time needed to sell the home while holding the home they want to purchase.
Putting Yourself in Your Future Home Seller’s Shoes
11) Let’s look at this from a seller’s point of view;
We’re in a seller’s market. Whose offer is better? Someone puts an offer on your home but needs to sell first and hasn’t even put their home on the market vs. someone else comes along and already has theirs under contract.
Which is the more compelling offer?
12) If you find a property, we will need to include in the contract that the purchase is contingent on the sale and closing of your present property.
13) If the sellers see you haven’t listed your property, they will reject your offer.
14) You need to be a strong buyer; you will not be one until you have your home in escrow.
15) When your home is for sale, what would you say to a buyer with a home to sell?
16) Most sellers will not consider your offer until you have your home on the market or under contract.
17) If you find a home that you want to offer, and you need to sell your home to purchase another, most sellers in our market may not accept your offer.
18) on average, many sellers not only want to know you are listed but might also insist you are under contract for your own sale to accept your offer so that it minimizes their own risk. I would advise you to reject a contingency should we receive one when you list.
Renting is an option.
There is always the chance they could rent back from the new owner in the interim.
19) Do you have someplace to go temporarily once we sell your home? If so, this would put you in the strongest position when looking for the perfect home.
20) Most sellers won’t take your offer if your home isn’t on the market and your mortgage requires you to sell. It’s better to sell and have your equity available to purchase right away.
21) You can also rent, so you don’t go out and purchase the wrong home. You also don’t want to hold the buyer of your new home hostage.
You need to be ready to move quickly.
22) The seller of the new home you have in mind won’t wait for you to list and go under contract when other ready and able buyers are out there.
23) If you find your dream home, you should be ready to move quickly, and that might mean having your house listed. By then, it will be too late.
24) I would strongly advise against that. Do you think a seller will be willing to wait for your home to sell if they get other offers?
Your best option is to sell first, then buy
Sell first, and you’ll know exactly how much you can afford
25) How do you plan on buying the home of your dreams without an offer on your home?
26) Wouldn’t it be easier to negotiate an agreement knowing exactly how much equity you have in hand from your current home sale?
Picture … losing
27) So how will you feel when you find your dream home, and it’s now contingent on your home sale, and another buyer comes in and buys it out from under you because they don’t have a contingency?
28) If you’re good with losing a home you love, we’ll wait.
29) You reduce your chances of getting that home when you find it because a seller isn’t often willing to wait to sell their home while you get yours listed, marketed, and sold.
30) They’ll sell to the ready buyer. And unless you’re going to buy cash or don’t need to sell this house to buy, you’ll lose out
You can always turn down offers on your home.
31) List your home, be aware of what’s out there, and the minute you receive an offer, your agent should know if any of the currently available properties match your criteria. If there are none, you can decline the offer.
32) You could do that, but what happens if we don’t find a buyer immediately?
33) The best way to ensure this goes smoothly is to list your home first. When we receive an accepted offer, we can begin finding your next forever home.
OK, but that could be expensive
34) This is an acceptable strategy if you are comfortable owning two homes simultaneously.
35) If not, let’s put your home on the market while continuing our search for your next home. As the seller, you have control of terms and timing, and we can negotiate them to fit your needs.
Will you buy in cash?
36) Do you need the sale proceeds of your existing house before you can buy another one?
Let them learn for themselves.
After counseling, if they insist, work with them through the process to allow them to see how it works. Losing out in the home of their dreams can be a tremendous lesson.
37) Let’s find a home and attempt to negotiate to make your contract contingent on selling your present home.
If they insist on not listing before finding a home, they need to have their home “listing ready” when they see a house to move quickly.
But let them know they may lose out on a home to other offers because their home isn’t on the market yet.
They may change their minds and list after losing in a few offer battles.
38) It can be done, but it will be challenging…
The first question I ask is, ” Do you need to sell to buy?
Often, you get a simple yes/no response, but with modern financial tools available, it warrants a deeper engagement with my financial resources.
If not, then great. Validate that they have the resources they think they have, and go over the risks related to a property selling quickly or not.
Then, we look at the “worst-case scenario” of selling first and how it can be mitigated by delaying closings, staying with family, or renting a short-term unit.
It’s always challenging, but with the right agent and plan, it can be done with minimal disruption.
Copywrite © August, 2018 Daniel Dobbs MHM Mortgage /// All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed “Attention: Daniel Dobbs, Author- VP-Broker Mutual Home Mortgage 265 S. Randolph #120 Brea, Ca. 92821 Cell: 949 250-3981 Dandobbs6@gmail.com NMLS #307631 BRE #00986886