Citing from Seinfeld, one of the best Sitcoms of all time, in the game that we call life, we all want “hand”! I’m hard pressed to find another situation where someone on two different sides of the same table have so much “hand” on one side and so little “hand” on the other. The table I’m referring to is the real estate “Closing” table.
Who Has Hand and Who Doesn’t
In this ultra competitive real estate market, on one side of the Closing table you have multiple Buyers fighting to purchase the same property. On the other side you have Sellers dictating the terms and the time frame of a Closing because they have multiple offers to choose from. In fact, Sellers often have so much leverage that they can go back to Buyers and request the removal of terms they don’t like. In short, Sellers have all the hand and Buyers have little to none.
Why This Matters
Frequently, my clients are relocating from one home to another. In the majority of these situations, they need the equity from their existing home to purchase their new one. Because the Seller they are dealing with is often in the same situation, and that Seller in turn in the same situation, the sale of a single home is often tied to the sale of several others. This means that a problem with one sale in this chain often causes a domino effect that affects the sale of many others. For this reason, orchestrating a seamless sell and purchase situation is logistically challenging. Especially when children are involved or when movers are waiting to deliver a moving truck packed to the gills, no one wants to be between homes and in limbo for any period of time.
Tactics for a Seamless Move When Buying and Selling Simultaneously
In a simultaneous sell and buy situation where Sellers have all the hand and Buyers have little to none, a combination of the below strategies and ideas can be implemented to help create as seamless a transition as possible:
Use and Occupancy Agreements: A Use and Occupancy (U&O) Agreement is basically an agreement that allows a Buyer to move into and use a property before Closing OR permits a Seller to remain in and use the property after Closing. As this is not standard operating procedure, U&O language should be negotiated for and included in the Offer to Purchase (if not, it is tough to negotiate for a it following). I traditionally recommend a U&O of at least 3-5 calendar days (U&O’s are normally capped at 60 days) to account for possible delays in Closing.
PODS/Mobile Storage Units: Every day that a mover’s truck is out of service is money out of pocket to a Buyer. Recently, I have had several Buyer clients use a POD to move and negotiated for permission to store it on the property before Closing. Once again, this is not standard operating procedure and should be negotiated for and included in the Offer to Purchase.
Same Agent and Attorney: With many moving pieces in a simultaneous sale and purchase scenario, the more people involved in the process, the greater the likelihood that something will be missed. With a single agent/attorney team negotiating on behalf of a client, they can work to structure the terms of one side of a client’s purchase/sale with real time knowledge of the other side. In some cases, a client may have two agents (one with the sale side and one with the purchase side). In that case, an open dialogue between both agents is key.
Couch Crashing/Planned Vacations: In the majority of cases, all that is needed is a day or two between a sale and a purchase. A couch to crash on or a planned “stay-cation” for a family at a local hotel or with friends or family will often do the trick. If approved by a Buyer’s lender, it may also be possible for a friend or relative to sign all necessary purchasing paperwork on behalf of a Buyer(s) while they are out of town.
In summary, the simultaneous sale and purchase of real estate is a logistically delicate scenario that requires planning and strategy. Having a single real estate/attorney team that is familiar with the above options and strategies can help to make the process as seamless as possible.
Please contact Attorney Kyle Smith with any questions.