Should the client buy first or sell first?
Selling first gives the client a known budget and no risk of carrying two homes, but may mean a short-term rental or a rent-back. Buying first lets the family move once and choose the next home on their schedule, but requires the down payment and qualifying income before the current home sells. Most of our move-up planning starts by modeling both paths with the client's advisor: cash available, debt-to-income, and the cost of carrying both homes for a few months.
What are the main ways to fund the next down payment before the current home sells?
The common options are a bridge loan secured by the current home, a home equity line of credit opened before listing, a pledged-asset or securities-based loan against an investment portfolio, a loan from a 401(k) or family, or a lender program that lets the client buy before selling. Each has different costs and risks, and some affect the client's ability to qualify for the new mortgage. These are financing and investment decisions for the client, their lender and their advisor; we coordinate the real estate timing around whichever they choose.
Can the client make an offer contingent on selling their current home?
Yes, and the standard California purchase agreement has a contingency for the sale of the buyer's property. In competitive Bay Area markets, sellers often decline or discount those offers, especially in the spring. A contingent offer works better when the client's home is already in escrow, is well priced and likely to sell quickly, or when the market has slowed. Our members can look at recent sales in the target neighborhood to judge whether a contingent offer is realistic there.
What is a rent-back, and when does it help?
A rent-back lets the seller stay in the home for a period after closing, usually a few days to 60 days, under a written agreement. For a move-up client who sells first, it can bridge the gap until the next purchase closes. Longer rent-backs may affect the buyer's owner-occupied loan, so the length is negotiated up front.
Will the client owe capital gains tax on the sale of the current home?
Often not, but Bay Area appreciation can exceed the exclusion. A single owner can generally exclude up to $250,000 of gain, and a married couple filing jointly up to $500,000, on the sale of a main home owned and lived in for two of the last five years (Internal Revenue Code section 121). The client's accountant can estimate the gain using the purchase price plus improvements.
Can the client keep the current home as a rental instead of selling?
Some clients do, which keeps a low property tax base and a low mortgage rate. The tradeoffs include qualifying for the new loan with both mortgages, landlord rules under California's Tenant Protection Act and local ordinances, and the capital gains exclusion, which can be lost if the home is rented for more than three years before a later sale. We can provide a rental estimate so the client's advisor can compare keeping and selling.
Can a younger family transfer their low property tax base to the new home?
Generally not. California's base-year value transfer under Proposition 19 is limited to homeowners who are at least 55, severely disabled, or victims of a wildfire or other disaster. A family moving up will usually pay property tax based on the new purchase price, roughly 1 percent plus local assessments, which is worth including in the budget (California State Board of Equalization).
How do school boundaries factor in?
For many move-up families, schools drive the search. Attendance boundaries can differ from city lines and change over time, and a listing's school information is not a guarantee. We point clients to the school district's own boundary lookup and recommend they confirm enrollment with the district before removing contingencies.
How do our members prepare the current home to sell while the family still lives there?
Families with young children need a plan that fits naps, school and pets. We schedule repairs and staging in a short window, group showings into set times, and often recommend pre-listing inspections so the sale is less likely to fall through. When the family buys first, the current home can be prepared after they move, which usually shows better.
What does the agent handle, and what stays with the advisor?
The agent handles valuing and selling the current home, finding and negotiating the next one, and timing the two escrows. Financing choices, investment decisions, tax planning and insurance stay with the client's lender, advisor and accountant. Our members do not give legal, tax or investment advice.
Is there a referral fee for advisors?
No. In California, a real estate broker generally may not pay a referral fee to someone who is not licensed as a real estate broker or salesperson (Business and Professions Code section 10137), so we do not pay referral fees to financial advisors, accountants or attorneys.
How do I refer a client to the collective?
Send us where the client lives now, where they want to move and their timing, and we match them with a member who works in those counties. With the client's permission, we keep you updated so the financing plan and the real estate timeline stay in step. Refer a client.
This page explains how these sales generally work in California. It is not legal or tax advice. Every estate and trust is different, so please confirm the details with the estate's attorney or certified public accountant.