Signing contract on house and closing 8 month later (real estate, apartment)
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Hi all - I have been seeing listings with closing in June 2022- any one has any experience of going in contract now and then closing 8 months later. What are the cons? Thank you
Hi all - I have been seeing listings with closing in June 2022- any one has any experience of going in contract now and then closing 8 months later. What are the cons? Thank you
No personal experience, but each situation can be unique.
A seller may not be able(or want) to vacate the property for numerous reasons.
A big one, is school. The June date you mentioned is probably due to the kids being done for the year, or, just totally done with school. Sometimes it has to do with distance relocation plans/situation.
But this is not unheard of. It’s somewhat of a risk for the seller because it’s a turn off for buyers.
But if both parties agree and sign the contracts as such, it’s all good.
The closing is sometimes an issue when a mortgage is involved. Commitments are time sensitive.
Many times seller will close on a property with a rent clause, meaning the buyer pays rent until the vacate day.
It’s all legit, and in writing in the contracts.
But it almost seems the seller might have kids in school and doesn’t want to close until school is over? Idk. You have to ask your attorney what’s going on. 8 months is just way to long for my liking.
They want to get the October 2021 price for a June 2022 closing, likely the youngest is graduating. THis way if the market crashes between now and then they've got you locked into way overpaying. Get a GOOD buyer's agent and attorney to review everything. Not sure how financing would work.
In the early 2000s we didn't list our existing house until we had closed on the one we were buying. The 'new' house was a strip/gut-and-remodel which the contractor said was would be "4-month job" - we were savvy enough to know that really meant at least 6 months until the place was (maybe) move-in ready, lol. We didn't want to move twice, so we listed ours in August with the stipulation that the closing could not take place before April 1st (7 months.)
Our ultimate buyers were for cash, and so banks didn't come into the equation. It was a waterfront house and they said they didn't care as long as the closing took place before May 1st, so the contract stipulated that. They were coming from an apartment and so the worst that would have happened if our 'new' place wasn't ready by that date was an adjustment at closing to offset extra rent that they would need to pay (they had a lease until June 1st, so the actual drop-dead date on their end was Memorial Day weekend.)
To be honest, more potential buyers cited the taxes as a deterrent than the extended closing date. I think only one said they wanted to be in before Christmas (total non-starter.)
Even with giving ourselves those 'cushion' months, it was still a nail-biter because (Murphy's Law) our house wasn't move-in ready until literally the last week in March.
Last edited by blueworld; 10-17-2021 at 04:58 PM..
They want to get the October 2021 price for a June 2022 closing, likely the youngest is graduating. THis way if the market crashes between now and then they've got you locked into way overpaying. Get a GOOD buyer's agent and attorney to review everything. Not sure how financing would work.
That’s the thing. They would still have to close on a mortgage waaaay before that.
So they would have to add a rent/possession clause.
But yeah would be a win for the seller IF the market crashed within that time period.
Or, you just never know, maybe the market will still climb. It’s all a gamble with real estate.
But I would say, if you love the house(or school district) that much, and can come to agreeable terms that work for both parties, I don’t see a reason to not go for it.
I know the buyers for my last house were so desperate and afraid because they had been out bid and lost out on numerous properties, that if I dictated similar vacate terms they most likely would’ve agreed.
It is understandable if the seller wants to finalize their own situation before they vacate after closing. Buyers usually request up to a week and anything more would result in the seller paying per diem for each additional day.
It becomes tricky especially when financing comes into play. Assuming you lock in your rate early, you will most likely need to extend the rate lock since the closing date is so far out. The extension can be good for 90 days to as many as 8 months, depending on the lender. All of this comes with a pretty penny though.
By that time, you will have incurred a significant cost. You have to ask yourself if it is worth it, most will say no.
I am not saying it isn't possible. Just make sure you find yourself a good lender/loan officer and a lawyer.
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