Let Buyer Move In Before Closing?
We have a buyer for our rehab property that has been approved for financing. He has told his landlord that he will be moving either by end of Oct or Nov. Should we let him move in by Nov 1 if he gives us some earnest money or rent before we actually close. My concern is that if he has to go ahead and pay for November's rent, he will probably want the closing delayed until the end of November and we are ready to get it done soon. Is there any problem with letting buyer move in before closing?
Thanks.
All of the Guru's say "Never".
Maybe they can pay rent pro-rated where they are. Or half month.
Usually, they will be eager to get in, so they won't put off closing.
Better to give them incentive then, if that happens, than let them in before closing. What is their motivation then to get to closing once they are in?
You can set up an early occupancy/pre possession agreement before closing. In general you can specify a rent payment or if there is a mortgage charge 1/30th of the mortgage per day. If you take a months rent up front it can just be pro rated at closing for them as well so there is no reason to delay. I've done this and just let the lawyer handle it in the past.
Thanks,
Jack
Hypothetically speaking what if he opens up another credit account or a blemish appears on his credit report prior to closing? Then what? He will reside in the home without being the owner and you will have to start from scratch with a buyer on top of getting him to move.
Personally I wouldn't let him move in and just come up with something creative to refund monies he has spent for rent.
This sounds like a bad idea. Has he actually submitted a loan application that has been approved, or has he just been pre-qualified? What is preventing him from closing now?
He is not able to close right now because the loan officer has not completed all the paper work (he has been approved) plus it will take 1-2 weeks for title company to do the paperwork. I'm starting to think that it's definitely a bad idea to let him move in early. I guess we'll just try to get a move on it so we can close by November 30th. Thanks for the advice.
I have a tendency to try to solve other peoples problems and think that everything will be ok.
Look at it this way, if they are in your place and 'something' happens, what is the downside for you? Plenty!!!!!!!
And, per the Guru's, too many buyers (especially 1st time inexperienced ones) will find problems or fault with the place and they will have ALL the leverage to re-negotiate your deal. :-o
My buyer and I had been jerked around by her lender. She was at the end of her lease and had movers coming. I let her move in, prayed alot, and closed in a week. Probably not the smartest thing to do, but after 5 "official closing" delays we were both emotionally drained.
I know this is a business, but there is a the human side, and I made a friend for life.
Not suggesting it, but letting you know I've done it.
ItzMe
The only way I would allow such a transaction is first have a lease agreement until the subject property closed.
I would charge a security deposit along with a monthly rent until close.
This is business, let your heart get in the way and you will loose.
Look at it this way you go to the store and want to purchase say a big screen TV and take it home tonight but pay for it next week. What do you think they would do?
I understand being kind and having a heart, but when it comes to 10's of thousands of dollars "It's Business".
Give to a charity or donate your time to a charity.
[addsig]
heathermarie,
It sounds like there is nothing that can be done to accelerate the closing date. Therefore, the only issue is where your buyer stays until closing. He can very likely stay where he is. If not, I would go with John Michael and have a strongly worded lease. By far your best position is to keep him where he is.
Regards,
Ed