A friend of mine told me about a conundrum that he has. He has a great apartment in a popular area but saw one that he would love to have instead. He can’t own two and the market hasn’t started it’s upward climb quite yet. Every time he drives by the new place, he almost gets a tear. We know…. Don’t drive by the new place… old joke!
There are a couple of options that he can take. The first one that I would recommend is for him to put in an offer on the unit he likes with the contract being contingent on his property selling. The closing date on the new property would be the same day as the closing on his property. What we call a simultaneous closing. With the entire market place being slower, a seller might now consider this option because they would at least have a contract on their property. In most cases, the seller would require some contingencies of their own. There is a very good likelihood that they would want a special clause in the contract that allows the property to be shown. Should another contract come in, the first buyer would have a certain amount of time to remove the selling contingency or release the contract so they could have a guaranteed closing date.
The first thing he should do is put his property on the market. I have preached the virtues of a full service Real Estate company before but today, it is even more important. The communication between a seller and his agent is imperative. And for the umpteenth time, price is NOT THE ONLY selling factor. Consider paying some closing costs or paying some maintenance or something to entice a buyer to your property. A full service agent will be more likely to discuss and create these options for you.
Back to my friend. He puts his home on the market; he offers an attractive incentive; he and his agent negotiate a contract on the new property. Now we just wait and see what happens. WRONG! Now is the time to have everyone communicating. The new property owner needs to be kept in the loop on what is happening with his property. If they become part of the sales circle for the old unit, when more time is needed they are more likely to grant the extra time.
Another option would be to negotiate a contact and rent the property to help with the expenses on the current property until it sells. He will need to discuss this with his mortgage rep. They will probably need a copy of a signed lease before they will approve the mortgage.
There is also the Lease-Purchase option. This allows a buyer to do the ‘credit clean up stuff’ that some need to do to get the better rate. In this scenario, a contact is negotiated however the closing will be delayed for a period of time such as 6 months. During that time, the buyer will become a tenant and pay rent for the property with closing on the property at the end of the lease period. This is not an option program. The contract is solid just the closing date is pushed back. The seller may even credit part of the rent back to the purchase price of the property. Check with your mortgage rep, but my understanding is that they cannot credit the entire amount back. They can only credit back over the amount of an average rental for a similar property.
Again, another creative program that your REALTOR® can help you with. Have a great week!
