Seller requested 30 day close, mortgage company may/may not be able to accommodate

13 Replies

I have a contract on a house.  Buyer asked for 30 days.  Being my first contract, I did not know that I had to ask the lender if this was possible - so I said yes.  Mortgage Co said they are trying to speed it along [usually use 45 day lead time] and the worst that could happen is we ask for an extension.

My question is this:  I have renters already lined up [my son and 3 college friends - w/parents as guarantors] but I can't draw up a lease without knowing the move in date.  I can't get the utilities arranged, nor an electrician lined up to fix some issues ... without knowing the move in date.

Suggestions??

Lots of ways to approach this kinda thing.  These days 30 days is pretty standard, not long ago it was 45, but if the lender is saying 45 and you have a 30 day contract I'd be a little worried if you're stealing the property, not so much if you are paying retail. 

I don't know about MD, but in Georgia you have a unilateral 7 day extension on RE contracts (either party can extend for any reason).  Past that you are at the mercy of the seller taking your E/M and walking...most wont because its a PIA to remarket and sell, the agent will be pushing to get it closed for the commission, but if you have a real deal and someone comes along with cash you could end up getting shafted.

If your seller will play ball you can do things like L/O it for 30 days or something to get utitlities switched and tenants in. Pretty rare they'll let someone move in the house before closing, but you never know. It helps that its family, doesn't help they are in college (and male). Biggest thing is to communicate and work together. I personally like working directly with the sellers, the agents tend to over formalize things with contracts and legal BS when "Hey, here's my situation, what do you think we could do that works for both of us?" works great with just about everybody.

If it were me, I'd try to pin the lender down some, coordinate with seller and just line everything up tentatively.  Find the electrician, tell him the date within a few days (he isn't going to be showing up precisely at 10 on 9/10 booked now anyway).  Then plan the move in with the kids, but tell them there may be a slight delay and to plan accordingly.  Call the utilities and schedule the transfer for when you think it'll happen, you can always call them and change the date.  Closings getting pushed by lenders is VERY common if you do a lot of this stuff.  A lot of what kind of reaction you will get from the other side will depend on why they are selling...

  

@Darrell (the high light never works for me)  

I would go with Darrell.  Everything he's saying sounds like its on the mark.  

What is the closing date now?   When does school start and how much before that do the kids arrive at school and need the place to stay in?

It sound like the kids will be agreeable to anything.  You can certainly move in before the utilities are in your name.  That can ever be adjusted after the fact.  You can read the meter and take a picture of it when yu move in.  The electrical must be minor and probably the electrician can do the electrical  when he kids are in. 

Are the sellers in the area or are they out of town?  Does the seller still have a PM or has that been terminated?  

I would imagine the sellers might be more comfortable with someone in there rather then the house being vacant?

@Darrell says "If your seller will play ball you can do things like L/O it for 30 days"

Or you could just pro rate it by the day.    

Does "L/O" (lease out?) mean that you would lease it before you own it? Sounds like a good idea. Maybe the seller wou;d do it without charging you so I would ask first. If not just pay to Lease it until you close? The numbers should work fine. Just try to pay them 1/2 of what the income is if they will let you do that.

Darrell has great comments! Straight to the point. 

Proof of funds from the bank would help encourage the sellers to give an extension. If they are really in a hurry to sell, then even a 30 day extension for you would likely put $$$ in their hands faster than selling to someone else. Your realtor should be able to help you with a lot of this; remember that the realtor works for you. 

Thank you all @Darrell Shepherd , @Barbara G.

for answering so fast. I was starting to lose sleep thinking about it. I didn't know I could offer to lease it from her this last few weeks to month. The closing date is set at 8/23 [2 weeks today], the boys begin school a few days after, but all live locally and can wait or not wait. Although they are excited to move in soon and keep asking. The seller is all moved out and gone to another state where she is now living and working. Perhaps the L/O idea is a good choice regardless.

I'll try to nail my lender down tomorrow, and give the seller a call [she gave my agent her number and I've actually already spoken to her once about some questions I had regarding the Oil Furnace.

My only concern regarding the lease was if i have a contract that states a move in date, although the boys will be fine with "whatever"- will their parents?  I've known all 3 of the friends for some time, but not all of the parents.

Feeling a little relieved that there is a possibly easy solution.  THANK YOU!

@Lois Stern Simply let the other side know now, don't wait.  As a seller I wouldn't let you, or more specifically your tenants, move in prior to closing.  What happens if it doesn't close?  Since your tenants are flexible, it makes this easier.  Yes, most lenders can get a loan done in 30 days, but the problem is the title work, etc. that generally occurs After loan approval.  In addition to notifying the sellers,I'd tell the title co. to start the title search, utility/city lien searches, etc. Now.  You'll need to pay some minimal costs for these if the deal falls through though.

@Upen Patel - thank you for your offer. It occurs to me that the same company is also handling our personal REFI and opening of a HELOC. I don't know if they waited until I had a contract to put their foot on the gas, but that's where we are, and may be what's holding up the works. I've sent an email to my lender to start the conversation.

@Wayne Brooks - I appreciate your thoughts on this.  The letter of loan approval was given along with the contract.  I have an appt to speak to the Title Co tomorrow to get that rolling.  

You can sure lose a lot of weight with worries in this biz, huh?  First property learning curve!

I think you mean the "preapproval" was given along with the contract, which means little, if not nothing.  An actual loan approval is tied to the property.

How are you handling the summer months when school is not in session?   I read where most people have the students/parents rent the property  for the entire year  so the owner is not without income for the summer months?  

Ok, a few things because there is some so so advice floating around. First, check with your lender to see if they'll be ok with a lease option before closing; they may or may not take issue with it and they have the final say so. Next, 30 day closings are going away pretty soon and 45 days WILL be the new norm for fast. As soon as they officially retire the HUD-1 and everything kicks in, no one but alternative finding is doing 30 day closings. Third, you can't execute a lease to a property you don't own or have a specific interest in; although a contract for purchase gives you constructive interest in the property, it's not the kind you can use to execute a lease. It also sounds like there's a lot of confusion over the process here based on some of her stuff said; this is where an agent can be helpful. And, agents tend to over-formalize and "complicate" things because that's what a principal needs when stuff goes sideways and the buyer and seller both think they're right.
As a seller, I wouldn't lease the property to you unless I had really high confidence the transaction would close. For me, in a market like the current one, it'd be a "You want a 15 day extension? Ok. Remove all contingencies and up your deposit."

Hopefully I won't need to ask for a lease option and the worst she can say is NO.  I'm not "there" yet, I just didn't know there were other choices.  I've got my calls lined up for tomorrow.  

@Patrick Connell thank you.  I'm not ready to execute but want to write it up so its ready to go - there is no reason for me to consider this not going through.  My credit is terrific.  But if the tenants want to move in as soon as possible after closing, why would I want to slow that down?  

@Barbara G. it will absolutely be a full year's lease.  And, I expect they will stay on the next year as well since they are only juniors right now.  And I will have parent's as guarantors of funds.  There's a really good bp forum that discusses student housing and vacation rentals... i've been reading and asking questions.

I appreciate the weigh-ins.  I think I just panicked a little last night as I realized we are 2 weeks out and I have a lot to get done... knowing the closing date would be helpful.  I like map things out with contingency plans, but if you don't plan - you don't have an idea of where you're going and what time you'll arrive...