Upcoming Free (& non-promotional) Home Buyer Classes:
Saturday, November 2nd, from 9am-12pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)
Tuesday, November 12th, from 5pm – 8pm (ish)
Marshall Community Center, Conference room
1009 E McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)
Saturday, November 16th, from 11am-2pm (ish)
Vancouver YMCA, conference room
11324 NE 51st Circle, Vancouver WA (corner of SR500 & Gher Road/112th Ave).
If these class dates and/or times don’t work for you, please let us know. We understand that you have lives, and families, and work. We will work something out that works better with your schedule. Just let us know….
….we also have home seller classes available too…link on left on website
Remember…with reservation…we will throw in lunch, or dinner! 😀
Happy (almost) Halloween!
Chris Berg (Cardinal Financial) & I have very EXCITING NEWS… it is CLIENT APPRECIATION EVENT TIME!
WooHoo! Chris & I are very excited to have TWO events this winter…
Saturday, November 23rd from 3pm-6pm for FROZEN 2
(short notice..I know, but we just got the contract from AMC)
&
Saturday, December 21, from 3pm-6pm for Star Wars: The Rise of Skywalker
This is just one of our ways that we say, Thank You, for choosing Chris Berg & I to help you with your Home Buying, your Home Selling, and your Lending/Refinancing decisions & business. Your friendship, and Your Referrals mean everything to us. Thank you for referring us to your friends, family, & co-workers
THANK YOU!
….now… disclaimers… 21+ area fills up quickly. Please make sure that if you request those seats that you are, indeed, 21+. (wait…does AMC actually have 21+ over? oh well… that’s what we are going to continue to call it)
Please RSVP tickets to either Chris Berg or myself. You can message us here, tag us on Client Appreciation posts, or email us at chris.berg@cardinalfinancial.com & traciedemars@aol.com .
We will also be doing eventbrite for this…as soon as we figure out how to set that up. LOL
*seating is first come, first served. This event is for clients… past, present, and yes, for future clients too.*
Now…for the less fun stuff, but still good information. We are going to jump right into this weeks topic though, because it is a LONG one this week. I promise to keep it short, and sweet next time though. 🙂
What is Delayed Possession? Why is it important?
In our current market, many homeowners are selling their homes, and moving into new ones. When a seller is living in their home, and selling it to buy a new one, they need the equity from their current home to buy the new home. So far…so good… right?
Step 1:
Homeowner puts home on the market.
Step 2:
homeowner/seller gets offer, accepts, and goes pending
Step 3:
Now homeowner/seller has to find a new home, and goes out house-hunting
Step 4:
Homeowner/now buyer finds a home, makes offer, and gets accepted. Yay!!
However…remember that homeowner-seller (now buyer) can’t buy new home until they sell old home, right? They are using the equity from the ‘old’ home to buy the ‘new’ home. Now, this part is all about timing… follow me here…
Homeowner-seller (now buyer) has to close on old house first (as seller), and then close on the new home (as buyer) AFTER the ‘old’ home closes . This is called a “simultaneous closing”…meaning homeowner-seller (now buyer ) closes on old house on Tuesday, and using the equity from their old home, closes on new home on Wednesday…or closes on both homes on the same day. Of course, the homeowner-seller (now buyer) can not move into their new home until it closes, and they can’t close on their new home until they close on their old home…so what does the homeowner-seller (now buyer) do? Why..they ask for Delayed Possession, of course.
The homeowner-seller (now buyer) requests that their buyers (for their old home) gives them time in their old home after closing so they can move into their new home. At this point you might think that this all comes after the deal is accepted, but it’s not. The delayed possession is agreed upon when the offer is written.
Ok… so we’re out looking at homes… some are vacant, and many have homeowners in them. We find the ‘perfect’ home, but the listing says that the seller needs time after closing to move into their new home. The seller is asking for Delayed Possession. Maybe the seller counters your offer requesting delayed possession… either scenario is likely. Sometimes delayed possession is only a few days, and sometimes it is a couple of weeks. In the case of multiple offers, and it’s only a few days, the buyer might say, “go ahead and stay in our new home (your old home) for a couple of days after closing…rent free. Sometimes, when there is no other offers, or the sellers is asking for more than just a couple of days, the buyer will request ‘rentback’. This means that the seller will pay rent for the period of time that they’re still in the home after closing on it to the new buyers. We can always ask for rentback when the seller is requesting delayed possession…again, this means that the seller will pay you rent for the period of time that the seller stays in the home after closing…usually at an amount equal to one day of your mortgage per every day they are there. However, just a reminder, in a multiple offer situation you might not be asking for rent back to make your offer more ‘competitive’.
Now that you know what Delayed Possession is… let’s explain it a bit further. Once you close on your new home your home owners insurance kicks in. The homeowner-seller switches over to a renters insurance. Renters insurance, as you know, only covers the contents of the home…not the home itself… that’s yours since you are now the homeowner. So what happens if ‘what if’ does happen?
This next story happened a few years ago now, but I had a client who put her home on the market, she received 5 offers on her home. Three of the offers offered my client delayed possession, and the offer she accepted gave her 14 days after closing to close and move into her new home…rent free. This was a good thing for her because it actually took us 6 days after closing her home to close on her new home because her seller had not done the requested repairs from the inspection, and we refused to close until we had those receipts showing those repairs had been done. Sometimes…this happens too. Always get your receipts for repairs prior to closing, and if you want a walk-through of the home…get that done before closing too. Once it closes… it’s hard to go back. Anyhow, we closed on her New home on a Monday, and keys were transferred the next day because HER seller needed 24 hours after closing to move.
That Friday night my client, and her SO packed up her home, and left at 10pm. Plan was to finish on Saturday afternoon after work, and clean the home Saturday evening/Sunday. I received a call from her Saturday afternoon, when she got there, that she thinks someone broke into their old home after they left on Friday because a window was ajar, the back door was unlocked, and they found folded cardboard on the basement floor, a couple of empty beer cans, and the unwrapped remains of the kid’s halloween candy that was left in the home. They noticed the spare keys were missing, and a couple of other small items…but all in all…. nothing else seemed to be amiss. It was weird…and kind of funny… someone broke in, ate all the candy (touching nothing in a full fridge or freezer), drank a couple of beers…and took a nap. She switched out the locks though, and braced the ajar window, to be on the safe side since the spare keys were now missing.
Then I got a frantic call Sunday night… well, it wasn’t so harmless after all… this halloween candy-napper had also cut the lines to the heat pump & furnace and stripped out the copper lines…about 10ft of it. S/he also cut the the clutch out of my clients SO’s motorcycle. Now…we have an issue…. who is responsible for this? I called the buyer/new homeowners agent to let her know what was going on so she could let her clients, the new homeowners, know. So what happens now? Well, the buyer/new home owner’s insurance needs to be notified, and my client (the seller) is responsible for their co-pay/deductible. Why does it shake out this way? Because the rental agreement says that the new homeowners insurance is to take care of it because they own the home now…. but the original purchase/sale agreement says that the home will be received by the new homeowner in the same condition as it was when they made the offer, and did the home inspection. All systems/appliances also need to be in working order, and my client had not transferred keys yet because she is not the renter and in possession of the home still.
I’ll be honest with you… this could have gotten very ugly… in the end, my client was going to either pay for the deductible, or the damage…whatever is less, but she wasn’t happy about it. It ended up being cheaper to pay the new homeowners deductible. While the new home owners, and their insurance were liable, she was still in possession of the home so it’s a mixed bag. She spent her last night in the old home to make sure that halloween candy napper didn’t come back…with her two big dogs, and a bat.
This is an extreme situation, and was the first time, and thankfully only time, in 15 years I have had something like this happen at this stage in the transaction. Typically, with delayed possession we worry more about whether or not the home is left in a clean condition, or if the homeowner/seller is going to leave the home a mess, or trash still in the home. I know plenty of agents, including myself, who have spent time cleaning a home after a seller left it messy. When the home is vacant prior to closing (even if it is after signing), we can do a walk through of the vacant home…in fact, I am doing a walk through of a vacant home on Friday. When the homeowner/seller isn’t moving out until after closing though…a walk through is more difficult since the sellers are still in possession of the home. 95% of the time, the homeowner/seller leaves the home empty and fairly clean…but sometimes we deal with that 5% of the time when they don’t. During the home inspection period, you can request that the seller has the home professionally cleaned (and/or the carpets professionally cleaned) upon closing, and pre-paid. Receipts are important. Of course, if the home has bigger repair considerations during the inspection, you may want to concentrate on getting those repairs, and the receipts for those repairs.
This one is pretty fresh still…. I had a closing last month where the seller had 24 hours after closing to move into their new home, and was going to have the home professionally cleaned. This was a hectic transaction to begin with, and the seller had been caught hiding things about the home. Oy vay…, and he was texting threats to both his agent & me. It was a crap-show. However, it was also a very good deal for my buyers. I showed up to the home to get keys, and to make certain that the sellers were gone. They were! Hallelujah! …and then they were not.. oh no… Yep, seller showed up and parked in the driveway. I thought, “ok…he’s just going to pay for the housecleaner that was in the home”, but oh no…he got in a fight with the housecleaner, and then took off. She started packing up, but wait! The home wasn’t clean yet! So, they got in an argument because the seller refused to pay her because she wouldn’t clean is crap out of the garage. Housecleaners do not do that. So, what do we do? Well, part of real estate is that sometimes it falls on us to make it right….as much as we can. I paid the housecleaner to finish the job, and I called my son in law and husband to help clean out the garage with my buyer. My husband switched out all their locks, for safety. Now…what you don’t know yet is that the seller took the mailbox, removed laundry room shelves, and …. get this… removed the laundry room cupboards. He literally cut the molding, and unscrewed the cupboards from the wall. Yeah.. that was an attached item and shouldn’t be removed. So what happens with all of that? Nothing…. Again, this was an extreme case. The seller was crazy, and even refused to sign for 3 days. See… he didn’t actually want to sell…it was his wife who wanted to sell, so he made it difficult every step of the way. Good times…..
When I am working with a seller as a sellers agent, I advise them to just have a housecleaner come in when they are moved out… it is a little bit of money, but relieves so much stress for them, and for their buyer. Usually they do this, and it is nice for the new homeowners to take possession of a clean home. Per the contract, the home is to be left in a ‘broom clean’ condition…..swept, vacuumed, mopped, wiped down, etc. However, one persons idea of clean is not the next persons idea of clean. I also remind sellers to remove all garbage from the garage and around the home. Many sellers leave extra paint, maybe extra flooring, or other such items for the new homeowners….in fact… I left those items for the new homeowners when I sold my old home. This is pretty common, and usually appreciated.
When I am working with a buyer, I’m always hoping that the home is left clean, and usually it is. Most sellers do leave the home clean….thankfully. Sometimes though…… sometimes sellers leave other items. Usually it isn’t too much, and usually just things they ‘forgot’. Call your Realtor, and we will help you deal with it. It’s what we do. What you are reading here are two very extreme cases. This doesn’t usually happen… it’s very rare, so you can start breathing again. 🙂
Anyhow, this all being said… Delayed Possession is something we are dealing with right now, and fairly frequently as more and more homeowners are selling their current homes to move into their next home. It’s important to understand how it works, and ways that we can try to protect you. Remember…walk throughs (if we can), and receipts. Those are 2 key things. In short though… don’t be afraid of delayed possession as it is pretty likely you may be in this position. We have delayed possessions quite frequently where nothing exciting happens. I like it when nothing exciting happens. I tell you…there’s a reason why I don’t drink much… I’m afraid if I start..that I won’t stop some days….
Upcoming Topics:
What happens AFTER the home inspection?
What do I need to buy a home,
What if I don’t have a Down Payment?
Pre-Approvals…what, why… and the importance of getting one
Debt to Income Ratios….What is this?
Last Week: Buyers Due Diligence
Have a great day, and I will talk to you soon,
;-D
