My sister and I are in the final stages of selling our dad’s home in Kansas and closing his estate. We have a buyer lined up and sale contracts were signed with closing of the sale scheduled for 23, Aug. Today, my sister, who has been handling the bulk of the paperwork, got a phone call from the realtor about a problem. Apparently, the buyers didn’t get some of their necessary paperwork to the bank on time and now closing is going to be delayed by about two weeks. This in and of itself isn’t a huge issue for me and I really don’t want to scuttle the sale over it.
The problem is that the buyers need to be out of their current apartment no later than 27, Aug – no argument, no debate – it has to happen. What they want to do is to pay us a month’s rent and move in on the 23rd as originally scheduled and then proceed with the closing of the sale as soon as possible.
What are the risks if we let them move in before the closing of the sale? Could they back out of the sale yet refuse to move out thus become squatters we would have to evict? What happens if they burn the house down before the sale is closed?
We have a meeting with the lawyer handling the estate issues. Hopefully she can put our minds at ease and provide sufficient boiler plate before we sign anything. Prior to this meeting, do you have any advice or thoughts to share?
I did real estate for 26 years. Do not let the people move in without putting everything about the rental in writing, especially a clause that states “If the tenants do not close on the property by (such-and-such-a date) they agree to move out.” Give them three months at the most.
One thing I know is it takes quite a while to legally evict a tenant. If they mess up in any way, file an eviction notice immediately. DO NOT give them more time to get it together.
When I sold my house, my broker recommended against any ‘early move in’ deal. The problem is that if closing doesn’t happen, you’ve don’t just move on, you’re now a landlord with tenants stuck in the house you’re still trying to sell. They might just move out and the end of the month or they might not, and you’ve got to go through eviction proceedings if they don’t move, which usually take 30-90 days and involve their own issues. In the meantime they could damage the house or mess with showings of the house. If they burn the house down, probably your homeowners insurance covers it - but you better make sure that your policy will actually cover your house if you rent it out; a lot of homeowner’s policies only cover your primary residence.
It may be tricky to get an actual apartment for a month because they usually do leases. However, there are plenty of AirBNB places and such which will be happy to rent for a month.
Other than the fact that they might scuttle the sale entirely if we can’t work out an arrangement. I’m happily willing to meet them more than halfway to get this sale to happen but I want to do this with my eyes open and understanding of my risks and how much protection I really need. Trust is a wonderful thing but signed contracts help.
The house being sold has a detached garage. I wonder if it would work to rent ONLY the garage to the buyers as a storage unit. They could stash their stuff in there but would not be allowed use of the house or to set up residence on the property until the sale is closed. If they agree to this. I would be willing to reduce the sale price of the house by the cost of a couple of motel rooms for a month.
It seems odd that they happened to pick the perfect house for the “move-in before closing” situation - vacant house & non-local sellers (?). At the very least, I’d want independent confirmation from their bank, that they have indeed applied for a mortgage & it’s only missing one piece of paperwork. By “independent”, I mean info that goes directly from the bank to your or your realtor, not through the buyer’s or their realtors’ hands.
I’d really be a hardass on the lease too - ask for the max security deposit allowable by law, set rent at what their mortgage would have been plus whatever your insurance increase will be to cover renters, make it for exactly 30 days, with no clause allowing a month-to-month continuance, etc.
In my opinion, if you like their offer and don’t think you can do much better, can you do something like make the rent 150% of what the market rate it? All in writing, of course, but with a significantly higher rent than a reasonable alternative will help make sure the potential buyers are going to do everything in their power to get the deal to go through.
If a buyer seriously wants to buy a house, would they “scuttle the sale entirely” simply because the seller won’t allow an early move-in, which forces the seller to assume a landlord’s risks?
These buyers have many options–extended-stay furnished hotels, private rentals, etc–please don’t allow yourself to be manipulated by these people.
I say if you are willing to put yourself out to make the sale, find them an apartment/rental, maybe even offer to pay for some or all of it. Just keep them the heck off your property.
Certainly sounds less risky than letting them move in and rent.
If you let them move in and rent, they’ll ask to extend it beyond a month, then they’ll default on the payments, then they will be a massive pain in the ass to get evicted, and will destroy the fixtures and fittings on their way out. Well, that’s the worst-case scenario, but not the least-likely case, sadly.
If you let them rent the garage for storage, make sure they are clearly responsible for insurance of the contents, and agree in advance what sort of access you will permit, and how frequently, to the stored items.
Just say no. Acting in haste is never a great idea. Another buyer WILL come along.
I’d say no without a moments hesitation and solidly stand by it. Instruct your realtor to start showing it again. Let that trickle back to them and see what happens. And if they back away from the sale, as a result, let them.
I’d be reluctant and distrustful, much like the other posters. Lease terms generally end on the last day of the month, not a few days before it. They can find alternative living arrangements in a pinch if they are determined to buy your house. It does seem opportunistic that they want access before closing for a property they know is already vacant and owned by distracted absentee homeowners.
If you really want to go through with this, get a written rental agreement. Require a credit check and references, just like you would for any renter. Get a large damage deposit. Specify rent paid upfront. Specify a high monthly rental rate if they extend the rental period or hold over (let’s say three times the monthly market value rent). Require them to pay your additional attorney’s fees to reduce these terms to writing. Demand that they double their earnest money deposit on the house (although it shouldn’t total more than their proposed down payment). Specify that if they fail to close within the additional time they have requested, they agree that they have forfeited their earnest money deposit. If they are willing to agree to all of those terms, they are at least keeping up the appearance of being determined to close and they will have a lot more money on the table if they fail to close. These terms may cause them to balk but, if so, they were probably on the bubble of failing to close anyway. Good luck.
While I’m sure it’s risky as a seller, I’ve done the early move in thing as a buyer twice. Both times same story, negotiations and agreements lasted longer than the end of my current lease. The expense and hassle of finding a temporary place, without deposits and lease agreements, then moving all my stuff not once but twice in such a short period of time was my motivation.
Both times the sellers were reluctant but paperwork was put in as Annie described above and it all closed up without having to deal with being a renter again, which was why I was buying in the first place.
My brokers also put quite a bit of effort into ensuring I was both very serious buyer and actually capable of buying.
That’s a very dicey position. The house has been on the market for nearly a year and only a handful of people have even looked at it. It is located in a rural Kansas town that has a large number of homes on the sale market. We’ve dropped the price and if it was up to me, I’d be dropping the price by about $5,000 a month until somebody bites. I want this house sold quickly and I’ll try to be accommodating to make it happen. Getting this house sold ASAP without excessive risk to me is more important to me than maximizing the sale price. I’m talking with the realtor, my insurance agent and with the lawyer to understand these risks but I want this house sold.
