There hasn’t been the widespread appreciation – yet – that normally signifies a “sellers market”.
But as we’ve been documenting here, multiple offers are being submitted on every reasonably-priced listing. In many cases, sellers – and their listing agents – aren’t happy enough just to get a good price, they want to put the squeeze on the winning buyer too.
It’s understandable for listing agents to use other contract terms to help improve the sellers’ deal, and weed out the less-committed buyers.
But when they act like a it’s free trip through the candy store, some buyers will reject the terms outright, and others may accept but be hesitant and/or bitter of the treatment, neither of which aren’t in the sellers’ best interest.
These additional terms include:
1. Bigger deposits.
2. Shorter or longer escrow periods.
3. Shorter contingency periods.
4. Exclude attached items that should be included (appliances, lighting, etc.).
5. Sellers’ free rent/no deposit after closing.
This last item should be very concerning to buyers. Your loan documents include a clause that has you agree to occupy the home within 30 days after closing. But even if the sellers agree to vacate a day or two after closing, that could always change, and you could be left with an eviction process.
What do you do if you are the buyer, and find yourself having to accept a delayed occupancy?
1. Sign a rental agreement with the sellers.
2. Ask where the sellers are moving. If it is a vague answer, you could end up with sellers/tenants who don’t want to move when scheduled, and in California that can be a nightmare.
3. Insist on a deposit. Many listing agents think this is absurd, because they are owners, not tenants. But that doesn’t mean things won’t get dinged up on the way out, or garbage left behind (which happens a lot).
4. Include a specific amount in the agreement for “holdover rent”. I usually calculate a daily rental rate based on the higher of the market rent or buyer PITI payment, and then double it. If the sellers stay past their agreed date to turn over occupancy, then they should pay extra for inconveniencing the buyers who’d have to change their move-in plans. Some rental agreements don’t include a clause for holdover rent – write them in.
5. Monitor their progress as escrow is proceeding, and prior to releasing all contingencies on Day 17, verify that they are moving as planned.
6. Do a walk-through a few days prior to close, and see if they are packing.
Sellers and listing agents who respect the buyers will have a better chance at getting top dollar, and having a smooth transition. If there was one piece of advice, it would be for sellers to give buyers immediate occupancy at closing – take advantage of their enthusiasm about moving into their new home!