As in comedy, timing is everything when it comes to selling a house and buying another; mess up the pace and you could wind up flopping.
”It`s a very delicate situation . . . in terms of timing. Every buyer and seller has a different schedule,” says Fran Prio, vice president of residential properties for Rubloff in Chicago.
”I consider (timing) probably the worst part of the transaction,” says Craig Anderson, president of American Escrow & Closing Co. in Arlington Heights.
What happens if you are or expect to get sandwiched between buying and selling a house?
Say, for example, your house is sold but you can`t move into your new place because it`s still under construction.
Or maybe the day before you`re to sign the papers finalizing the sale of your home and the purchase of another, the people buying your place call and ask for a delay in closing because their mortgage company needs more time for loan approval.
According to real estate agents and attorneys, your first move in such a case should be to call the other party and negotiate for contractual changes, such as a different closing date.
It depends on the market
Whether you get the changes depends in part on the market, says Chicago attorney Timothy Rowells. ”If the market is moving boom, boom, boom, there`s a lot less flexibility. The buyer has got to be on his toes.”
Flexibility is also determined by your disposition and those of the people you`re dealing with.
”Anticipating and communicating your difficulties as early as possible is really important,” says Chicago attorney Jerry Haderlein.
James Kinney, senior vice president and director of residential properties for Rubloff, adds, ”Most people are fairly understanding, and unless someone`s back is against the wall, most people are adjustable in closing dates.”
Although a closing date is technically set when you sign a contract, you can write a letter requesting a date change and send two copies to the other party and his or her lawyer, says Marc Lichtman, a Chicago real estate attorney. If the other party signs the letter and sends a copy back, that is considered an amendment to the contract.
Possession dates can be negotiated in the same way.
Anderson, now of Wheeling, chose that route seven years ago when buying a home in Arlington Heights.
The sellers requested closing a month later because of problems a few deals removed, he says. ”Our seller`s, seller`s seller probably started the delay.”
Anderson didn`t want a postponement because interest rates were going up, so he agreed to change the possession date and to allow the sellers to remain in the home for a month after closing. After the closing, the sellers had to pay Anderson $35 a day until they moved out.
The fee was written into a use and occupancy clause in Anderson`s contract.
According to a Chicago Association of Realtors contract, the clause specifies that at closing, the sellers will pay a per diem or monthly fee until moving out.
The fee should at least cover what you`re paying each day in principal, interest and taxes while the sellers remain in your home, Lichtman says.
If you`re the one who wants to stay, understand that the sellers are not your landlords nor are you their tenant, which means no lease or tenant rights are involved, Lichtman says.
You should also expect the buyer to ask for certain safeguards, one being that 2 percent of the purchase price be put in an escrow account until you move out, says Haderlein`s cousin, Michael Haderlein, president of Haderlein & Co. Realtors in Chicago.
The sellers might also request that you:
– Pay for all the utilities during your stay.
– Maintain insurance on the home and indemnify, defend and hold the buyer harmless for any injuries you might have on the premises.
– Pay the buyers` legal fees to fulfill the terms of the agreement if for some reason you can`t move out by the agreed-upon time.
The flip side to remaining after closing is to allow the people buying your house to move their belongings in before closing.
The risk, however, is that once they get in, they might find cracks in the wall or other imperfections that could tempt them to back out of the deal, Lichtman says.
If you choose this alternative, you should include contractual provisions stating that the buyers have inspected and are satisfied with the condition of the property; and that they will store their belongings in the home and wait to start living there until after the closing, Lichtman says. The buyers should also have to insure their personal property and the home and agree that you are not responsible for damage done to the buyers` possessions.
Two good moves
The benefit to staying in a home after or before closing is that you won`t have to move twice.
But moving twice might not be such a bad idea, especially if the buyers are willing to pay more for the house in order to get in when they need to, Lichtman says. ”This all comes down to price.”
Anderson, for example, got the price he wanted along with the $35-a-day fee that helped pay for the inconvenience of storing his belongings and moving in with relatives.
That`s probably the cheapest interim housing people will find, but it can also be the most costly emotionally, Rubloff`s Kinney says.
Debra Young of Mt. Prospect, for example, found herself in a high-tension family situation four years ago when her father and stepmother sold their California home. The family moved to a home they owned in Nebraska, where Young watched over her nine brothers and sisters for the next five months while her parents traveled to and from Illinois while trying to work and find a house and community they both liked.
”I can tell you, it was pretty hairy,” Young says. ”It was hectic because of the fact of not knowing . . . They would call and say, `Well, we haven`t found anything yet,` and you`re like, `How much longer is it going to take?` ”
A more pleasant way to pass the time between houses is suggested by Tony Schmid, president of Schmid Realtors in Chicago. ”. . . Put the furniture in storage and take a vacation. That`s a good one.”
If that`s too expensive, you could ask your real estate broker for help in finding temporary housing, Kinney says. ”That`s often what we do, is find some place people can go.”
Temporary housing can be a hotel suite, though that might be too small for a family and too expensive unless there`s money from a use and occupancy or penalty clause to help pay the tab, Kinney says.
Another idea is to find a short-term lease on an inexpensive apartment that the landlord is having trouble renting because it has an odd floor plan, ugly view or some other problem.
For more comfortable living, an agent could guide you toward an apartment complex that offers short-term leases, though the rent on such apartments is generally high because of the expense of cleaning and painting the apartments after each tenant moves out, Young says.
She`s a leasing agent for Colony Apartments in Mt. Prospect. The 783-unit complex offers three-, six- or nine-month leases. A totally furnished one-bedroom apartment costs $975 a month.
So you find housing for yourself; now where do you put your stuff?
If you`re without permanent housing for only a few days, you can keep your belongings in a rented moving van or a friend`s garage.
For longer stays, you could rent a unit at a self-storage facility for between $35 and $200 a month, depending on the size of the storage unit, says Dan Boorstein, owner of Acorn Self-Storage, which has four facilities in the Chicago area.
According to real estate experts, the way to cure such headaches is to avoid them altogether.
”If it`s well thought-out and well planned, it really should not be a problem,” Kinney says.
That planning should include getting an idea of where you want to live and then putting your home up for sale and getting your own financing in order.
”If your funds are ready, you can go,” says Kevin Griffin, director of destination services at American Escrow.
You could also include a contractual contingency that states your purchase of a home is based on the sale of your present home.
If all works as planned, you should close on a home you`re selling and on the home you`re buying all on the same day, thus ending a 30- to 120-day process.
”Most people usually wind up selling their home first and they`re usually able to find something afterwards,” says Realtor Haderlein.
Often people flip-flop the first step by finding a house they love, putting a contract on it and then telling the real estate broker to hurry and sell it, Schmid says. ”And that`s when you get people straddling these horses that start moving apart.”
He and the other experts agree, however, that most buyers and sellers realize it`s in their own best interest to work together.
”I do not want to paint the picture that it`s scary, because it really isn`t,” Schmid says. ”Most of the time people are nice.”
