By Marilyn Kennedy Melia
Time is money.
Since affordably priced homes are in short supply in many markets, buyers that fear other purchasers will be offering more money than they are willing to pay might entice a seller by accommodating his need to take time moving out.
This strategy is only effective, however, if “the dollar offer is close to what others are offering,” believes Marguerita Castanera, of Century 21 Wine Country, Sonoma, California.
Still, “being able to time your closing to when the seller is ready can be a major incentive [for a seller to accept an offer],” observes Jessica Nelson, a Redfin agent, Columbia, South Carolina area.
Nationwide, reports the National Association of Realtors, the typical number of days from the time a seller accepts an offer and the deal actually closes is between 30 and 45 days.
Providing time to a seller may give a buyer the edge, but John Pinto, of Realty World in Napa, California, believes that a closing shouldn’t be delayed, but instead the buyer should take title and then “rent back” to the seller.
Anytime a closing is significantly delayed, Pinto believes “there’s opportunity for things to go wrong,” like a seller changing his mind or the buyer losing mortgage approval.
Instead, offer a “rent back” to the seller, Pinto suggests, whereby the buyer takes ownership but contracts for the seller to stay, renting back his former home.
Buyers often charge a pro-rated amount in rent, based on the typical monthly mortgage and taxes. But “everything is negotiable,” Castanera says. When buyers are aggressively competing for a home, a rent-back might be free.
In rent-backs, former owners, “should secure renter’s insurance to protect their personal property from natural disaster or theft,” adds Michael Barry of the Insurance Information Institute. The new owner will want this, too, to protect against the possibility the former owner damages the property, he concludes.
© CTW Features