"Buyers propose to lease the house for 6 months at $1500 a month with $650 going to rent and $850 going into escrow for purchase at the end of 6 months."
As anxious as I am to sell after so many years, to me this smelled fishy. Under the Residential Landlord Tenant Act, which many states have adapted all or portions of , these prospective buyer can have you over a barrel in making repairs on an already drastically reduced property prior to closing the deal.
OK, maybe I'm too suspicious, MAYBE. But the house has been reduced from 109k appraisal to 60K asking over the years. They offer 57k and they can't come up with down payment. If you have good credit, my understanding is you don't have to have 20% down like the majority of the population.
Well, the prospective buyer is the wife of a doctor. Give me a break! I can come up with 20% and I haven't worked in 8 years. Heck I can get it on a credit card if I had to.
Anyone seen this deal or gotten caught in one of these? In case you are wondering I live 1k miles from the property, a 3 bdrm 2 full bath with garden tub, separate shower and dbl sink in master bath, full kitchen, dining rm, 15 x 25 foot living rm with fire place, a 1/4 basement, front porch, built in the 40's of adobe and block and it also has an apartment out back with kitchen, shower bathroom and 3 more rooms. the yard is fenced and has a fire place built into the stone part of the fence. also I am retired from the military. Oh yeah, there is only one realtor in town.
Real estate is really a prime example of this idea. Everythig is easy, everyone gets along, agents make all kinds of money for nothing. Then a closing is delayed, buyers do something to lose a loan (like buy a car day before closing), sellers damage a house the morning of closing, a missed lien pops up, guys loses his job.....
Jim you must be pretty lucky with things - I always advise my clients to be sympathetic if needed but be firm as well. While I've not had major issues, I have had things that could have gone very badly very quickly had we not removed the emotion form a business transaction.
RJD - too bad your agent didn't caution you about moving out before closing - never advise that, especially now. I don't know what agent would advise letting people use YOUR home as a storage facility...not smart - ask your helpful agent to cover your added expenses, see how that goes.
It's not about being afraid - it's about doing what you can to help but within reason. No good deed goes unpunished!
I've had two instances, both times sellers "felt bad" for the buyers and caught bullets for their trouble. Both had moving trucks sitting there so they let them in on a friday expecting to close monday. In one, heavy rains came the day after they moved in and the septic backed up. That reulsted in damage to the floors and....you guessed it - the buyer's furniture to the tune of about 5K. It was also discovered that the leach fields were inadequate - even tough they had a septic inspection prior.
Other one was a contingenty buyer, they were delayed and same story with the trucks and a firday afternoon. You guessed it...Monday came, Tuesday came, Wed came....they never closed their home. So my folks had to pay to be uploaded, stored, then off loaded back into their home.
A good friend of mine had a buyer in the home waiting to close trip over a scatter rung THEY installed and break a hip - guess who was sued because the "buyers" were in their home?
I always ask for 48 hours for my sellers to clear their homes AFTER closing. This is routine and ensures that this doesn't happen. There are too many variables in this biz.....and there are many more examples I could relate from other agents - but it happens.
I've also seen agents say exactly what you are...."I heard, I haven't seen, We'll write this and that....". That's fine in theory but let it hit the fan and have to deal with things while your folks are expecting you to have answers - and do it on a Friday....you'll change your opinion.
These guys went against my recommendations so it wasn't on me - but they are poster children for what can go wrong.
it is not the normal way!!!!!!
Just do not make it an oral friendly arrangement, make it legal, also your attorney can take some
money in escrow for that period of time just in case....
Also you want to make sure through your Realtor/Attorney that the loan will be approved for this
Just be very careful...
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In most cases I would say heck no but we have a current scenario where the Seller is comfortable with allowing this to happen. I think it really depends on the specific details of each situation. It is actually pretty rare, and quite risky, to allow a Buyer to take possession prior to closing. We have never allowed this to happen in our 11 years in real estate. If you are confident that the closing will take place, and you have a good, solid, Temporary Occupancy Agreement, it is really up to the Sellers comfort level in taking on the extra risk. 99% of the time I would say no but it is ultimately the Seller's decision to make.
In our case the Buyer wanted to make significant improvements ( including new hardwood floors ) before she moved in. Our Seller has allowed the early occupancy with a daily fee, insurance and the understanding that if the sale does not close the Seller gets to keep all the improvements, the earnest money and Buyer must vacate immediately . The Buyer's loan has already been approved so we were confident enough to move forward with this one.
Also just had a similar inquiry on another of our listings. Buyers were in a bind because they sold their home with very short contract to close time frame and needed to move in about 2 weeks. Lender could not get loan approved that fast so they wanted to move in a week or two early so they could avoid a double move....wife had just had a baby the week before. Seller would be OK with this, under similar terms, but would want to make certain the Buyers are rock solid as far as financing goes.
I would definitely suggest that the Seller include a real estate attorney in their dicsussions to make sure all their risk is explained, and mitigated, in heavy favor of the Seller. I am NOT an attorney and this reponse should NOT be considered legal advice. Always consult a skilled attorney in matters such as this.
Keller Williams Realty North Atlanta
Also do not discount the fact that when a closing is delayed for a week it increases the chance that it never closes at all. Then you would have a huge problem.
The buyer can make other arrangements. All the best, Jeff
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Close the house and the buyers can move into an extended stay - don't put the seller's through this.
If you want to accomodate the buyer, you may wish to make the earnest non-refundable (unless it's a government loan), request a security deposit, have them sign an as is clause, remove any contigencies in the contract...all things to protect the Seller.
While John's answer is interesting, but because he's from another state with different practices, he perhaps doesn't realize that in Georgia, each side normally does not have an attorney representing them. While getting legal advise is always advisable, there will be an additional cost to the parties requesting it, since the only attorney in the deal is the closing attorney who represents the lender.
Use and Occupancy agreements in various forms are common and they happen all the time, no, not like every transaction but every once in a while. Discuss with your attorney the legalities of the use andoccupancy and have both attorneys agree and cover both parties.
But do note what Tim states below, from a seller perspective it can be a scary proposition as the "what if's" are tremendous.