This is in Nebraska, first of all.
We received and accepted an offer from a buyer to purchase our home and the closing date was 2 Feb. There was apparently some confusion between the lender and the buyer (which was apparently just resolved today, 4 Feb) on what their proceeds on their loan was going to be (for home improvements, I presume). So buyer backed away from that lender and has allegedly secured another lender…but that means it's going to be another 21 days potentially before the loan is secured, and may mean another appraisal and all that stuff.
We have already moved out of the home because everything seemed like they were good to go (they've even asked to bring lumber to our driveway so they were ready to go to work on the deck they wanted to refurbish). They appear to be motivated. But we have all of our home in storage and we're living out of a freaking hotel right now.
Our plan was to rent an apartment for three months while we do house-hunting of our own, but don't want to sign a lease until we know we're not ALSO paying a mortgage at the same time.
We cannot move forward with the purchase of our own home until this one sells, because the proceeds from this sale is what we will use to pay cash for our next home. We haven't even taken the time to seriously look at homes yet, for that reason…we needed to be sure we had the cash to be serious when we did, because once we purchase that home, I am retiring from my job.
So we're stuck in a cash-poor position (albeit with me still working), staying in a hotel, and now the buyer is asking if they can move into the home and pay us rent (for whatever our reasonable expenses are) until the loan is secured.
My big worry here is squatting on their part, particularly if they start working on the deck (in my mind, that gives them more leverage in that regard, though I admittedly know little about it).
But overall, I'm just tired of it. Moving out was a HUGE hassle with putting everything into storage. And I really don't want to go through moving at least the necessities back into the house. So really, I'm as motivated as the buyer is to get this thing done.
I trust my agent to a fair degree, but at the same time, he is also motivated to do everything he can to get the sale done, and I'm nervous he might leave us in a bad position unintentionally in his zeal to keep the deal moving forward.
What are the potential pitfalls of our position?
Things Going South With Buyer
byu/FrontOfficeNuts inRealEstate
Posted by FrontOfficeNuts
9 Comments
Do NOT let them move in. No working on the deck. Nothing.
oh hell no dont let them move in before closing. thats like the number one rule of real estate – possession after closing, not before. Once theyre in there paying “rent” you basically have tenants with rights and if their financing falls through youll have to formally evict them to get your house back.
I get that youre motivated and stuck in hotel hell but this could turn into a nightmare way worse than your current situation. make them wait it out just like you are.
Please, please, please do not let them move in. Do not let them do work on your deck. I know you’re strapped for cash but you could be putting yourself in a bad situation.
The only thing that might make this doable for you is if they put up $xx,xxx in a non-refundable deposit and pay you rent.
Can you get enough stuff unpacked to move back in? I’d you’re delayed several weeks and money is tight, I’d try to get out of the hotel.
I would absolutely not let them move in, work in anything, or store anything there. This may still fall apart.
Based on what you’ve said…
There was nothing but their own choice that kept them from closing “on time” (presumably the contract allows some short delay past the Feb 2 schedule). But now, they’re delaying 3-4 weeks, and that surely goes outside the contract. And surely any contingencies they had ended by Feb 2. They don’t get to “change their mind on lender” and then also possess your home in any way early without a significant cost/commmitment.
If a Buyer came to my listing under these circumstances, my strong suggestion to the Seller would be to require the Buyer’s down payment to become non-refundable, and a hard closing date (time is of the essence) on whatever date I got committed from Lender2 before agreeing to any extension. And I wouldn’t in this round be willing to let them possess early. And you better check with an attorney to make sure what your “eviction” rights are if they do move in and don’t close. Sure as hell wouldn’t allow buyer pre-closing possession in a tenant-friendly state.
>My big worry here is squatting on their part,
> the buyer is asking if they can move into the home and pay us rent
Don’t allow early occupancy. Don’t rent the property. This motivates the buyer to close quickly
The other way to do it is to charge high rent. Collect a significant deposit. And talk to a lender about a bridge loan or a low down payment loan for purchasing a new home, so this sale getting delayed doesn’t affect your move
Do not let them move in or do repairs before closing – 1000%
If they qualified for the 1st loan they should have closed. Just cause they didn’t shop around prior doesn’t mean they can delay closing because they don’t like their rate.
I’d have your broker talk to their broker.
They are on thin ice with the change in lenders already. NO WAY should they occupy or enter the property until closing.
No rental, no nothing. They will never leave if things go south, and you won’t see a dime
Absolutely *DO NOT* allow them to occupy the house before close, and *DO NOT* allow them to deliver or store items there, and *DO NOT* allow them to work on anything.
I’m going to be honest here and say their chances of this other mortgage happening are slim. One doesn’t bail on closing day (or two days after, as it were) because of a “misunderstanding.” They clear up said misunderstanding ASAP. That means whatever is being told to you is a “misunderstanding” was actually the buyer being short on cash to close, taking their credit and not passing the pre-close soft pull, or some other serious, no-way-out matter that actually meant they no longer qualified for the loan.