We have already talked about a Lease/Purchase as an option when selling your home. But another option in many situations is what we call Early Occupancy.
Let’s consider all the elements that have to come together perfectly in order to get your home sold:
First, you have to get your home in perfect condition to list. Today, your home has to show like a model AND be priced appropriately if you want to sell.
Then, you have to find a buyer. Even in an improving real estate market, Buyers are facing challenges in their quest to buy a home. For example:
Buyers have been pre-approved for a mortgage to purchase a home priced at $300,000, as long as they can put 20% down. They only have enough cash to put down 15%, but they need a place to live NOW. They have good jobs and are saving monthly so that they can come up with the additional 5% in several months.
As the Seller, you have several options to make this work. You could finance the 5%. Of course, you could reduce the price of your home and take less, or perhaps you could negotiate the actual Agreement of Sale and do an Addendum allowing Early Occupancy. During the period between occupancy and settlement, the buyers will pay a monthly fee but this arrangement is not subject to Landlord/Tenant Code. Settlement occurs when the mortgage is finalized.
Here’s another situation where Early Occupancy solved a big problem. The home we had listed was under contract to a couple that absolutely loved the house. Then the Septic System failed the inspection. As we looked for solutions, the only type of septic possible on this property was a Mound Septic System right in the front yard. Not acceptable to the Buyer.
We found out that a neighborhood down the street was going to be connected to the local Sewer System. After many phone calls, we were able to make arrangements for this property to be connected to the sewer. That was the good news but the bad news was it would take months to resolve and it would cost the Sellers additional money. It was not possible for the Buyers to finalize their mortgage and go to settlement until the sewer was connected. They really wanted to buy this house and they wanted to move in as soon as possible.
We completed the Agreement of Sale, the Buyers and Sellers agreed on the selling price and all other terms and conditions of the contract. We executed an Addendum stating that settlement would occur within 30 days of the sewer being connected to the home. In the interim, the buyers took occupancy and enjoyed summer with the beautiful in-ground pool. During that time they paid a monthly amount to the Sellers, equivalent to a reasonable rental payment and the buyers paid all other utility expenses. Title did not pass until the actual settlement.
As you can imagine, there was much more to this story. The lesson learned is that if all parties work together to resolve a difficult transaction, it can result in a happy ending.