Ask Our Broker With Peter G. Miller
By Peter G. Miller
CTW Features
Question: We are now selling our home, but worry that if we get a buyer, we will not be able to quickly find a new house. Is there some way to delay closing so we have more time to look for another property?
Answer: In the usual case, it takes 43 days to close, according to July statistics from Ellie Mae. However, closing times vary, according to the needs of individual buyers and sellers, as well as local custom.
The buyer might lock-in a mortgage rate for 45 days – close later and the lock can be lost. Instant closings are also unlikely because of federal rules such as the need to provide the Closing Disclosure (CD) at least three days before settlement and the time required for a home inspection, appraisal and loan underwriting.
In an ideal world, you would like to close on the sale of your home and the purchase of a replacement property on the same day. In reality, that may not happen. Research from the National Association of Realtors shows that 18 percent of all sellers who settled in July stayed over after closing. Closing is not delayed. Instead, sellers stayed at the property after the settlement paperwork was signed.
Staying over after closing requires what is known as a “post-settlement occupancy agreement” – a form that can be available from a broker or attorney.
For buyers, a request for a post-settlement occupancy agreement can be very attractive with cautions. If a seller wants to stay on, there is a matter to negotiate – maybe you will consider such a request if the seller will leave the washer and dryer or take down that old tree out back.
Also ask, do you have a proper post-settlement occupancy agreement for your jurisdiction? You need a specific form because local rules can differ.
What insurance do you need? Speak with your insurance broker.
What will you charge the seller per day? What about a deposit?
If you are financing with a mortgage, be very careful to follow the loan agreement. If you purchased the property as a residence, then lenders expect you to move in within a given time frame, say 30 to 60 days after closing. That means the seller must be out and gone so you have enough time to move in as required. If you do not move in by the deadline, the lender may have cause to wonder if you’re actually an investor and not an owner-occupant. This can be a big problem because lenders have different – and stiffer – requirements for investment borrowers. In the worst case, they may cry foul – or mortgage fraud.
© CTW Features
Peter G. Miller is author of “The Common-Sense Mortgage,” (Kindle 2016). Have a question? Please write to peter@ctwfeatures.com.
