Back to Back Closings can be Dangerous for Your Health

December 12, 2009 by  
Filed under Real Estate

by Laura Days, Esq.

laura_thumb[1]Back to back closings for buyers and sellers have great appeal.  You can sell your house in the morning, and buy the new one in the afternoon.  However, back to back closings are extremely stressful (for buyers, sellers, and their attorneys) and sometimes do not work as planned.   What happens if there is a delay in getting the funds wired from the bank?  What happens if the seller has not fully moved out?  How can last-minute title issues throw a wrench in the process?  What if you are the second back to back in a series of three transactions and the first one is late?

There are ways to avoid these potential pitfalls.  The best option, if you can afford it, is to buy your new house first, move, and then sell your old house.  But many of us can’t afford to do that.  So here are two other good options for avoiding a back to back closing:

The first is to sell your property, receive the proceeds, but stay in the house under a use and occupancy agreement for a few days until you are ready to go to the next transaction where you buy your new house.  This saves wear and tear on everyone, and you have a few days of lag time in case the first closing gets delayed for reasons beyond your control.  The cost of having a use and occupancy agreement drafted is small, and usually you have to pay “rent” equal to carrying charges to your new buyer (mortgage, property taxes, utilities).  It’s very simple to calculate.  There will be probably a “holdback” of a small portion of your funds to ensure that you will be out of the premises when you promised to be — even if you run into problems with your purchase.

The second option is to find a short term rental or a hotel and a good moving company with a storage option.  Many sellers find it relaxing to move into a hotel for a few days between their sale and their purchase, especially a hotel with a pool if you have kids, or one with a spa.  The moving company stores all your belongings until you are ready for the truck to come to your new house to unpack.  Rather than trying to do everything in one day, it spreads the process out and mitigates stress.

So if you’re thinking of a back-to-back transaction, rethink it as a delayed purchase with either a use and occupancy of your former residence or a mini-vacation at a nearby hotel.  It is very beneficial to your health, and also very protective for the transactions you are entering into.

Laura Days is an expert at helping clients buy and sell real estate, and works with the firm’s of counsel, Heather Hoffman, on making sure titles are clean and marketable in closings.

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