Buyers wants to move in early, is this ok?

Question

I've refurbished a house and have a buyer under contract. The buyer is selling their house and the closing on their house is three weeks ahead of our closing. The buyer (young couple with two small boys and a big dog) is asking if they can go ahead an move in since they have nowhere else to go. It's fine with me as long as they don't change their mind after they move in. Also I feel strange about charging them rent since I'm making a very good profit off this deal since I'm getting full asking price. However, if for some reason they do fail to close then i'm out the expense of re-staging and re-marketing the house, which I figure is around $2500.

I'm wondering if it's just plain stupid to let the buyer move in early, or if not, then what is the easiest strategy to ensure that I get $2500 if the worst happens (i.e. call it deposit, call it earnest money, ....).

Thanks for the feedback,

Greg

I'm wondering if it's just plain stupid to let the buyer move in early, or if not, then what is the easiest strategy to ensure that I get $2500 if the worst happens (i.e. call it deposit, call it earnest money, ....).

Thanks for the feedback,

Greg

Nicole A. · Answer

@Greg Banister *YOU* aren't making them move twice. This is *THEIR* challenge to deal with and should have had a plan of a place to stay in the interim. Please do not follow your feelings or your heart on this.

If you wanna say something to them to take away the "bad guy" look that you're apparently worried about, tell them, "Unfortunately, I am unable to allow anyone to take possession/tenancy of the property due to liability and insurance restrictions until closing. Thanks for understanding and I'm looking forward to closing day to hand the keys to your new home over!"

I can almost guarantee that your answer of "no" to them will not be a big issue. They will not suddenly be insulted and think you're cold-hearted. And if they do, well, tough! Then you'll really know they would have been super risky to allow into your home before they own it.

Mike Cumbie · Answer

Hi Greg,

Generally I don't recommend my clients do that. However if it has to be done a huge down payment before move in has to take place. Security deposit and rent. If they say nevermind at least you have something coming in. Their mortgage person says "oops my bad".... Hubby gets laid off 5 days before close.... Dog gets a tumor and there is no cost fluffy isn't worth.... even rent.... They just "grew apart".... They never noticed the train tracks or smell from basement... Neighbor is a real jerk, no way they can live next to him..... cars drive way too fast down this road for our kids.... Oh and now we have nowhere to go while we look for a new place.   It isn't just remarketing and staging, it is a 3 month eviction process and damages at stake.

Good luck in whatever you decide

Nicole A. · Answer

Don't ask them about if they can rent their current resident! You're getting too involved. They are adults, let them figure it out.

Karen Margrave · Answer

Once someone moves in it's no longer a "new" home, and if something happens, you're getting less for the house than you could have.

David Dachtera · Answer

@Greg Banister,

Any chance they can do a rent-back to stay in their current home until the new one closes?

Jay Hinrichs · Answer

we don't do this on our new construction.. you want THEM pressuring their lender to get it done while they are in a motel.. that's what residence inns are for.

in rare instances I have given them possession of the garage.. but that is like on a sat and the close is on Monday..

its a frequent request we get.. and as other stated no way they are getting in our brand new construction home before they own it.

Jim Cummings · Answer

Greg

NONE of the Major Builders will even give Buyers a second thought about moving in before Closing - It's a HARD NO!

Mostly they say it's about Liability! Whatever the reason, they have legal staff, etc that has determined NO Prior Possession to be the correct policy. I would follow their lead!

Tell them you'll be ready to close when the Loan is ready! If you want to be assuage your conscience - offer to pickup part of their storage costs.

Christine Nicolella · Answer

I've drafted pre-possession and post-possession agreements for clients. There are risks but if you have all the right language: not a tenancy, big deposit, as is possession at closing even if defects found and they pay for insurance, you should be ok.  Do the walk thru for closing at possession and make them sign off on it.  If there are issues, you get deposit and if they cause damage there is insurance; make sure you are a named-insured.  If it is a cash deal, have the purchase price put in escrow.  Or just ask that the closings be aligned to benefit all involved.  Banks will usually work to accommodate sellers and buyers in this regard, they see this a lot.  Either way, do what you feel most comfortable with.  Good luck.

Christine N.

Bob Okenwa · Answer

@Greg Banister

The worst-case scenario of having them damage something or not move out if the deal falls through is a lot worse than the $2500 of earnest money you'd get upfront.

Buyers wants to move in early, is this ok?

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