You can rent it back from him until your new house is ready.

Yes - ALWAYS close and rent back - no to a delayed sale - too many things change or can go wrong.

We're getting done with new house, moving, doing all the fixing up / painting / repairs of existing house and then putting on the market. I just don't need the stress of timing and keeping the house "show ready".

It's possible to sell and rent back from the new owner.

However, there are some limitations if the new owner that purchases your home finances the purchase. The limitations come from the lender in that in a normal conventional mortgage the buyer must occupy the property within 60 days of closing. This is a standard condition to most mortgages. The way to avoid this condition is for the buyer to pay cash or to have a mortgage that allows the property to be a rental. If the property is an investment for the buyer, than the mortgage rental rider is SOP.

You will want to have a written lease with the new owner if you choose to sell and rent back.

The difficulty with a sale/rent back type scenario is that you eliminate a large percentage of buyers up front because they want to occupy the property after purchase. Especially if you are building and you are early in the process, it is more difficult to nail down a date. Suppose he agrees to a year and it ultimately ends up taking 18 months to build your home?

Just be aware that however long you think it will take to build the new house...it will take longer than that. LOL.

I was in a similar boat as you - lived in my "old" house while my new house was being built. I didn't want to have to move twice and didn't need the money from the old house to build the new.

I worked with the builder of the new house to come up with what I THOUGHT was a realistic move-in date. Hahahahaha....

Anyone want to guess what happened?

I ended up homeless (my "old" house sold quickly) and had to store a bunch of my stuff for a few weeks. Good times. :)

I assume you would be doing the transaction without a realtor and therefore avoiding the realtor fees. If so, have your attorney draw up the purchase agreement in your favor, even if that means a good discount. Write a favorable long lease that can be terminated by you with a sixty day notice, but not by the buyer.

In my opinion, this is one of those times where open communication is the key to success. Too often real estate transactions become uncooperative games, in my opinion keeping your neighbor appraised of what is happening with your build and really letting him know what is going on, while listening and being responsive to his plans, will probably serve you better than a fierce need to isolate your "business" from him.

We sold our house before starting the new one. DH had gotten a new job with the same company. Part of the agreement was that he had to live in the territory he was managing and they gave him 4 months to make it happen. Our new house was being built 2 hours away from the old house so we wanted to be near the build. We also needed money from the sale of the house for our new build. We weren't sure how fast the house would sell either. Some houses in our neighborhood were taking 6 months or more to sell. Ours actually sold in a few weeks. We thought it would be less stressful for us having the old house sold and just focusing on the new house.

The whole process didn't go smoothly though. We had a house lined up to rent which wasn't easy to find. We moved some of our stuff in and 1 week before the closing on our old house we get a call that the guy ended up selling the house. He had the house on the market for a while and someone who had viewed the house months before made an offer. The guy did give us money for the cost of the moving truck and a hotel stay we needed to get all the stuff out again. Then we had to scramble to find another rental. Not easy and very stressful. We did find another rental but at the end of the rental term our new house wasn't complete. They gave us 2 extra months. We moved into the new house which was complete enough to allow us to move in but still needed things done. So the first few months of living in our new house we had workers in and out which wasn't fun.

A couple of follow up points...

A bird in the hand is better than two in the bush. A sale today without marketing has real value. You will have access to the equity today and can use that money in the build and you will not have to worry about the difficulty of selling the home. Additionally, a sale without realtor's commission has real value.

These two things give you some leeway to make a deal that nets out being better for both parties. You can give a discount because you are getting real value above the traditional sales method and if the buyer is flexible he can also get some real value.

However, depending on the financial situation and your local real estate market, it is entirely possible that you will lose money doing this. You note that your house is paid off, but in a rent back situation you are going to have to make rental payments and probably at the market rate. It is entirely possible that given enough time or the right market conditions this will destroy any value you receive.

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There are other options out there. Residential real estate has relatively few and pretty simple transactions, there are many other sales arrangements out there that are atypical for home sales but fairly standard in commercial real estate. For example, you might do an option contract on the property with a guaranteed sell by date.

In that case he would pay you some amount today (usually between 5% and 10%), this secures his right to buy the property at a later date for a set amount. In a residential transaction that payment would probably be a credit toward the purchase if he agrees to complete the sale and would be held in escrow by the attorney. You agree that you will offer the property for sale no later than X date, but may offer the property for sale on any date before that with a 60 day notice (or whatever you are comfortable with). If he passes on purchasing that day he loses the money. Inspections would be done when the option contract is executed and you will have a refund period just like a typical contract but the final home sale wouldn't have an inspection or an appraisal contingency. He can still pull out at any time, he just loses the option payment he made.

This protects him from things like a slowdown in the economy or a major loss of value on the home (he only risks the option payment he made), and incentivizes his going through with the sale. It also means you don't have to make rental payments.

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I used to do options in rental properties quite often. Frankly, I just find the houses that look like they could use some money and offer them a few thousand dollars for the option to match any offers when/if they sell. Nine out of ten times they just call me up and ask for an offer before they even call a realtor and I get multiple properties close together over a period of a few years which really lowers my costs. Note: To relieve my conscience I only make fair offers, I am not trying to take advantage of people and although that certainly costs me money, I do sleep better at night. I despise those people who offer pathetic amounts of money to people in desperate situations.

It's rarely easy and things rarely coordinate smoothly. You can go with "bird in the hand" and either rent back your own house or rent another, or you can build your new house and move/put it up for sale at your leisure. In the end, it totally depends on how fluid you can be financially. Most people must sell their house in order to finance a new build.

We bought the lot we wanted to build on. We then sold our house and moved into a rental. So glad we did this as market fully changed in the two years that followed our purchase of the lot and we would have lost hundreds of thousands of dollars if we had waited to sell our old home.

You can go with "bird in the hand" and either rent back your own house or rent another, or you can build your new house and move/put it up for sale at your leisure.

With respect this is a logical fallacy called a false dilemma. This is not an either/or situation. There are literally thousands of different ways to make this happen. Just because people are familiar with two typical real estate arrangements doesn't mean that is an exhaustive list. I suspect that you can find an arrangement that works well for everyone involved that avoids any real risk for both parties.

In the end, you want to sell your house when the time is right for you. He wants to buy your house. Start by having a discussion with him to find out if those goals are compatible and then if compatible call a real estate attorney and discuss it with him. It isn't hard to develop a purchase agreement that adequately commits all parties while simultaneously protecting all parties.

Been there! Like you we have always had 100% equity when in this situation. Financially we had the luxury of waiting until very close to finishing our previous new builds prior to putting our then existing residence on the market. We don't fully move out (just de-clutter within an inch of our lives moving non essentials to the new build) because I have always felt a nicely staged home shows better.

This timeline has always, with one exception, felt more comfortable for us rather than having a "deadline" hanging over our heads and perhaps having to move into a rental. The exception was in 2007 when the new build took us a lot longer than we anticipated and the existing home went on the market right at the time housing prices started to tank. We ended up chasing the market before wising up and lowering to a price which accurately reflected what was happening. Had two homes for longer than anticipated; about 4 months.

Our last new build was next door to our existing home and yep, a neighbor was "very interested and very serious about making a deal" for the existing home. The neighbor's interest disappeared rather quickly when given first crack at the house prior to listing.

We were the buyers in a similar situation. My now husband traveled to a midwest city where his employer was based. He went househunting but didnt find anything truly exciting. So, when the executive inquired, DH said I liked your house better than what I saw on the market. Next day, the guy came back and said that if DH was serious, they were willing to sell. Turns out they had already purchased the lot and found the builder but were waiting for the right moment. My husband's comment spurred them to decide this might be a good opportunity. They made the deal in March, closed on the sale in May then rented the house back to the prior owners until fall.

We did not want to move our items twice so part of the deal was the movers delivered our furniture and boxes and moved it into one corner of the basement. We had bare minimum two bedroom apartment worth of belongings and this was a 3 bedroom with full basement so did not cramp the sellers. We found a short term rental of a semipro baseball player who was happy for the opportunity to get some unexpected income without having to worry about getting a tenant who did not want to leave. The deal worked well for all of us, the seller, the buyer and the temp landlord

As mentioned above your local market will really dictate what you might want to do. Keep in mind that presidential election years can affect the pool of buyers but at the end of the day a still depends on your local market and inventory available.

We were worried about getting an offer on our house as well but ended up getting an offer in 36 hours and requested that we rent the home for the 60 days mentioned above. But we also requested a later closing date. We still had to find a temporary residence for five months.

Interesting enough if we would’ve held the house for a few more months we would have made more money you just never know

We listed ours about two months before we were supposed to be finished. We were approved for carrying both mortgages but in reality I didn't want that. We listed in mid August and sold in mid October. We asked for a Dec. Closing and they agreed. Our house still wasn't fine but was close. We had our items delivered to our new garage and also got a pod. I wasn't moving things twice nor did I want to delay closing and take that risk.The kids and I stayed with my sister for a week while hubby and dog stayed in our camper on our acreage at New house. After a week we moved in. There were no mirrors but there was electricity and hot water! It wasn't ideal but it worked. Our builder practically lived with us that December. But now he is a friend and I love our house so much I have to pinch myself sometimes that it's mine.