Selling Half Of Your Second Home
The process for selling half your second home is almost identical to selling the whole home.
You still love your second home, but you’re on the fence about keeping vs. selling it because you’re not using it as much as you had hoped… Or maybe you have competing financial priorities. At current interest rates, borrowing against your equity may not be a great financial decision.
With Savvilla, you can sell half of your second home and trust that the process (and your home) will be professionally managed from start to finish.
Savvilla will find a pre-vetted buyer and then assist you every step of the way in converting your ownership to 50/50 tenants in common while achieving your liquidity goals.
Contact Us
You (or your agent) contact us to arrange an evaluation. Or, if your house is presently listed for sale and fits our exacting selection criteria, the process may get underway when one of our Ambassadors contacts your listing agent. Regardless of which side initiates a dialogue, our evaluation team will need to review information about (and photos of) your home to verify it is a suitable candidate for consideration before we schedule a meeting. Please provide a link to photos of the home in your initial inquiry.
Let's Connect (Zoom/Facetime)
We’ll arrange an informal video chat to step you through how Savvilla can enable you to have your cake and eat it too by right-sizing your ownership interest in your second home and cashing out of the rest. We’ll cover every aspect of Savvilla’s professionally managed offering and answer any questions you may have. If it feels like a mutual fit, we’ll kick off our process.
Engagement
Your engagement letter with Savvilla will outline each party’s roles and responsibilities, and formalize your working relationship with us. Once you’ve provided your electronic signature and a 50% deposit*, the Savvilla team will get right to work preparing your second home for the second home marketplace and engaging the right professionals including an experienced agent. If you have a preferred agent, the Savvilla team will be available to assist with TIC expertise, resources and referrals. If you don’t, Savvilla will refer you to an agent who specializes in TIC real estate transactions.
*Once you remove subjects on the purchase of the home, your deposit becomes non-refundable.
Marketing
In most jurisdictions, a 50% TIC interest is eligible to be listed on MLS. Savvilla will work with your agent to prepare the MLS listing in TIC format. The MLS listing will be the primary source of exposure to prospective buyers and their agents.
Savvilla will generate a home-specific operating agreement based on historical data you (or your property manager) provide about operating costs. The operating agreement will include a home-specific operating budget and home-specific amounts for the Contingency Reserve Fund, the Default Reserve Fund, and any upfront costs to bring the home into service (ex. furniture and decor, kitchenware, owner storage lockers, etc.).
Prospective buyers who pass Savvilla's vetting process will be provided a copy for review. Typically, sellers who are retaining 50% require an offeror to sign a conditional operating agreement prior to making an offer. The operating agreement is conditional on the tenancy in common coming into effect. If the deal goes through, the operating agreement comes into effect simultaneously.
Offer & Acceptance | Payment & Closing
Once Savvilla has found and vetted a compatible buyer who is committed to acquiring a 50% interest, verified they are in an immediate position to make an all-cash offer for 50%, and the buyer has signed the conditional operating agreement, Savvilla will advise the agents the prequalification elements are in place.
The agents will negotiate the purchase.
Savvilla will provide the parties’ agents with best practice examples of TIC-specific clauses they may wish to consider including in the offer (designed to protect your interests). To ensure the transaction will be compatible with the Savvilla-managed offering, some of these clauses may be required.
The offer and acceptance components operate just like a whole home sale transaction but instead of a title transfer at closing, the title is instead reconfigured to 50/50 tenants in common.** An escrow agent will be used to receive payment from the buyer. Agent commissions and closing costs will be deducted from the proceeds. If there are any outstanding loan amounts due on your second home or outstanding liens, they will be deducted from the proceeds and paid off as well. The rest goes to you. Savvilla recommends the Letter of Instructions to the Escrow Agent also provide for the seller's contributions to the Contingency Reserve Fund, the Default Reserve Fund, and any initial home configuration costs that may be agreed upon between the co-owners to bring the home into service.
**For properties in Mexico where a fideicomiso (Mexican bank trust) is involved, the existing fideicomiso will either be updated to reflect the new beneficiaries added to the fideicomiso, or the notary may recommend the formation of a new fideicomiso if the present one is close to its 50-year expiration date.
Co-Ownership Configuration
Depending on where your second home is located, you will have anywhere from 2 weeks to 2+ months prior to title alteration (to tenants in common) to move your personal belongings out of the home (or into owner storage lockers if they already exist). The furniture and décor will remain other than any items you specifically excluded in the purchase transaction. Once that step is complete, the property/rental manager will inventory the contents of the home (kitchen, linens, mattresses, etc.) and coordinate the purchase or replacement of anything required to bring the home to the standard outlined in your operating agreement. They will also coordinate any necessary repairs/maintenance, mattress/furniture replacements, etc. Lastly, the home will undergo a deep cleaning before being returned to service.
In More Detail: Co-Ownership Configuration
If you’re already operating your second home as a short-term vacation rental through a rental agency or on sites like Airbnb and VRBO, your home is probably already configured correctly to host guests when you’re away. And you may already have owner storage lockers to keep your family’s personal belongings safe when others are using your home. But if this will be your first time sharing your second home, your property/rental manager will give you a to-do list to bring your home up to the standard outlined in your operating agreement. Between offer acceptance and title transfer, you will be required to complete this to-do list. In virtually all Savvilla instances, the second home is sold furnished, which means your furniture and décor will remain (other than any furniture/décor specifically excluded in the accepted offer).
For your new co-owner (or vacation renters), the home can’t feel like someone else’s home, which means all personal belongings and family photos need to be removed. Other than owner storage lockers (if applicable), you won’t be able to store your personal belongings at the home any longer. That means emptying all cupboards, closets, bathrooms, the pantry, the attic, the basement, the garage, etc.
The only rooms that will stay partially stocked are the kitchen (cutlery, dishes, glassware, cookware, kitchen appliances), the laundry room (iron and ironing board, cleaning products/consumables,) and linen closets.
If kitchenware is outdated, incomplete, or below the standard agreed upon in the operating agreement, the rental manager will replace items at this time. Expenses will be allocated according to either the terms of the contract of purchase and sale, or the operating agreement. If any of the household linen sets are incomplete, worn or damaged in any way, they will be replaced at this time as well. If new furniture or mattresses were specified as part of the transaction or the property/rental manager determines they are necessary, they will be replaced at this time. The ‘move out’ of personal belongings and re-stocking by the property manager will be followed by trades for any agreed upon work to be done to the home before the co-ownership calendar goes into effect. Lastly, a deep clean by a professional cleaning service will occur and then the home will come into service.