Happy House Hacking Podcast EP 29: Upsize or Downsize: 5 Strategies for Your Next Move

Link to full podcast episode here:



Upsize or Downsize?

The Ultimate Guide to Upsizing Downsizing Strategies in Today's Market

Understanding upsizing downsizing strategies has never been more crucial for California homeowners, as we recently discussed on our Happy House Hacking podcast. 

As real estate investors and house hackers ourselves, we were amazed to share this eye-opening statistic: the average U.S. homeowner now has $300,000 in equity.

You're not alone if you've been putting off that much-needed move. Whether your family is growing, you're ready to downsize, or you need to relocate closer to loved ones, we've seen how the current market presents unique opportunities - if you know how to navigate it.

Drawing from our experience guiding countless California families through successful moves, we're excited to share five powerful strategies that work in today's market conditions. 

These proven approaches help overcome the challenges of high interest rates and limited inventory while maximizing your equity position.

Buy First, Sell Second: The Power Move for Equity-Rich Homeowners

As real estate professionals, we've found that buying your next home before selling your current one puts you in the strongest position as a California buyer, especially with the significant equity most homeowners have built. This strategy eliminates the stress of coordinating simultaneous transactions and prevents you from feeling pressured to settle for a less-than-ideal home.

We've helped many clients use bridge loans, which make this strategy possible by using your current home's equity as collateral for your new purchase. Bridge loans typically come with higher fees and interest rates than conventional loans, but we've seen clients successfully use them to maintain a competitive edge in multiple offer situations.

Recently, we helped our Bay Area clients use a bridge loan to relocate to the Central Coast, leveraging their substantial home equity to secure their ideal property while avoiding the pressure of a contingent sale.

Keep Your First Home: Turn It Into a Powerful Investment

Converting your current home into a rental property creates an opportunity to build long-term wealth while moving into a space that better suits your needs. We've seen this strategy allow our clients to maintain their low-interest rate on their first property while potentially generating rental income that covers or exceeds their mortgage payment.

Most lenders require a signed lease agreement before approving your new home purchase, so timing becomes crucial in this scenario. The rental income from your current property might even help you qualify for your new mortgage, though we advise clients that lender requirements and documentation standards vary significantly.

We actually implemented this strategy ourselves, using the rental income from our first property to help qualify for our current home while building our real estate portfolio.

Buying and Selling at Once: Navigating the Most Common Strategy

The simultaneous buy-sell approach involves over 300 potential steps across two transactions, and we've guided many clients through the careful coordination and strong contingency protections needed. 

Your purchase offer will include a contingency based on selling your current home, while your sale agreement includes a contingency for finding suitable replacement property.

We always advise listing your current home before making offers on new properties to significantly strengthen your position in the market. In our experience, sellers are much more likely to consider contingent offers when the buyer's home is already on the market, especially if that home is priced well and shows beautifully.

We recently helped our clients coordinate a complex multigenerational move, successfully navigating contingencies on two different home sales to secure their perfect property.

Sell with Extended Stay: Your Bridge to New Construction

We've found that selling your home with an extended stay agreement provides maximum flexibility while ensuring you've secured your equity. Let's show you how this works: you negotiate a post-close occupancy agreement that allows you to stay in your home after closing escrow, typically up to 60 days with conventional loans.

Creating multiple-offer competition on your property strengthens your ability to negotiate favorable stay terms with potential buyers. We recommend using a seller multiple counter offer strategy, where you can request extended stay terms such as free rent or minimal monthly payments while you secure your next home.

We recently helped clients use this approach when transitioning to new construction - they received multiple offers $100,000 over asking price on their century-old home and negotiated a four-month free stay while their new home was being built.

Sell First, Rent, Then Buy: Maximum Flexibility for Better Deals

While moving twice isn't the most convenient option, we've seen this strategy give our clients incredible negotiating power and peace of mind. By selling your home first and moving into temporary housing, you remove the pressure of rushing into a new home purchase and can make stronger, non-contingent offers with cash in hand.

You maintain complete control over your timeline with this approach - some of our clients choose to rent for a year until they find their perfect home, while others set a goal to buy within 2-3 months. Most importantly, you avoid the common trap of accepting a lower sale price or paying too much for your new home because of time pressure.

This strategy recently helped our clients maximize their sale price and take their time finding their ideal home, ultimately saving them thousands compared to a simultaneous buy-sell scenario.

Choose Your Strategy: Turn Your Next Move into Reality

Your choice of strategy depends heavily on your unique situation, and we want you to feel empowered making this decision. Sometimes paying a bit more in short-term costs, like bridge loan fees or temporary housing, proves worthwhile for reduced stress and better long-term financial outcomes.

With homeowners sitting on record levels of equity and rates showing signs of improvement, this could be your perfect opportunity to make a move. We recommend starting with a clear assessment of your finances, timeline, and comfort level with different approaches – whether that's managing a rental property or coordinating a double move.

Remember what we saw written on that coffee shop notebook: if something costs you your peace, it's too expensive.

About the Authors

Owen and Camille Schwaegerle are more than just real estate professionals, they're house hackers, investors, and passionate advocates for smart homeownership. 

As a dynamic husband-wife team with deep roots in California real estate, they combine Owen's third-generation real estate expertise with Camille's innovative marketing approach. Together, they help clients navigate the path to financial freedom through strategic real estate decisions. 

Ready to explore your options in this evolving market? Contact the Schwaegerle Team for a free consultation and access to their detailed market reports. 

Together, they'll help you navigate these changes and find your perfect home.