Renting to a buyer prior to closing? Thoughts?

Question

I have a buyer who is wanting to rent between now and closing.  We were set to close May 15th but have to wait another 30 days because of the 90 day FHA "cool down" period.  Would you be willing to rent it or decline.  She was already packed and ready to go.  I hate to tell her no but understand there is a lot that could happen between now and close.  What do you think?

Jay Hinrichs · Answer

@Michael Hicks

this is not an accepted practice for those that are in the business of selling homes to home owners... when we sell our new construction homes.. the last thing we want is someone in then sale fail then have to spend 5k cleaning up their mess.

Plus it keeps the pedal on the metal to get the house closed.. once they are in the motivation to get out of the apartment or pay for continued storage is high and they want to close as bad as you do.

NEVER give occupancy until the deal has closed and funded ...

John Thedford · Answer

I would not do it. Tell them you would like to, but your attorney won't let you! That keeps you the nice guy with the buyer, and gives you a plausible excuse. As others stated, there are too many things that can go wrong.

Brent Fleeman · Answer

@Michael Hicks go see your attorney, one good thing about Georgia is the amount of time it takes to evict a tenant is only 7 days, but ask your attorney he will give you the best advice.

Joe Fairless · Answer

@Michael Hicksif she hasn't purchased it yet then it ain't hers to rent.

Karin Crompton · Answer

@Michael Hicksour attorney always strongly recommends against this, for many of the reasons already stated. He also points out that once someone moves their stuff in, what happens if the sale falls through? It could be difficult to get their stuff (and this case, them) out.

One concession we made recently was to allow a buyer to move items into the garage only, with no access to the rest of the house; we provided garage door openers and had the rest of the place locked. Our attorney wasn't crazy about that idea, either, but it seemed a low-risk idea to us (their items were consolidated should something fall through, and remainder of the house was still show ready) and it worked out ok. It was about 5 days prior to closing; the closing had been delayed from a Friday until the following week and the buyers had wanted to use the weekend to move items in.

Anyway, we use our attorney as the "bad guy" and politely decline, blaming him. He's happy to play that role. :)

Alexander A. · Answer

I agree with George. I would not proceed with the request.  There is not enough incentive for you to do it. The buyer should think about staying in a residence Inn or even vacation rental near the area.

George Hermann · Answer

I would tend to say no. There is no upside for you and lots that could go wrong.

Mindy Jensen · Answer

I would tread lightly with this request. She could move in, discover something she doesn't like, and ask for concessions after the fact. She would already be in, so it would be difficult to walk away from the sale if she starts asking for a little this, a little that, then soon it is a big this and a big that.

Perhaps you could have something drafted through an attorney that the property will be conveyed in the condition as of May 21 or whatever.

Some people just want to move in and be done with it, but others could become really difficult to deal with, knowing they are already in.

How has she been to deal with so far? If she has been problematic, bet on that behavior to continue. Would love to hear more...

Jerry Padilla · Answer

@Michael Hicks....... You could always ask for a large "security deposit" to be used as the down payment at closing as well.

Michael Hicks · Answer

@Mindy Jensen, she's been great to deal with.  My greatest concern is buyer;s remorse, furniture not fitting like they thought, no skin in the game on their part.  I've been doing this for a while and the situation has come up before.  In the past, I would never had considered it.  I feel this is somewhat my fault "my realtors" for writing a contract that couldn't be kept.  Thanks for the input.

@George Hermann, While there is a loth that could go wrong, the upside is that my carrying costs would be covered.  Too much risk for too little reward though.

@Alexander A., agreed.  They are living in their former apartment but the big inconvenience would be that they've already packed everything.

@Karin DiMauro, it stinks being the bad guy sometimes buut I guess it goes with the business.  Thanks for the input.

@Jay Hinrichs,

"Plus it keeps the pedal on the metal to get the house closed.. once they  are in the motivation to get out of the apartment or pay for continued  storage is high and they want to close as bad as you do."

That is the best reason that I had never thought of.  I have never rented prior to closing but considered it due to the circumstances.  Thanks for the input.

@Joe Fairless, agreed.

@Brent Fleeman, I've told her no at this point.  Attributed it to "my insurance wouldn't cover the dwelling with a tenant"

@John Thedford, I played it off on my insurance agent and coverage.  Stinks to be the bad guy.

Thanks for the input guys.

Renting to a buyer prior to closing? Thoughts?

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