Tuesday, May 24, 2011

Is Early Occupancy OK for Short Sales?



Short Sales Early Lease
Move in without closing first? Whoa! I just got an offer on a Destin Florida short sale listing with an early occupancy clause. The buyer wants to move into the property before closing and short sale approval. Is that a good idea? One of the negatives of short sales is the waiting time for the buyers during the short sale process. It could take 60-120 days for a short sale approval, then another 30 days for the buyer to close. Some buyers “bail” because they get wandering eyes or are tired of waiting so long. The solution for some sellers, to keep a buyer in the sale, is to allow the buyer to move in early. This could be a bad idea, but there are some things short sale sellers can do to lessen the risk.
1. Require the buyer to complete and remove the home inspection contingency prior to move in. Why? Removing this contingency overcomes one hurdle to successful closing. Since most short sales are sold “as is” with the right of buyer to inspect and accept or reject the property, you’ll have that clause out of the way. Also, it might lessen those phone calls to the seller as a landlord after the buyer has moved in.
2. Require a lease. This may seem basic, but without it, you might lose legal protections if the closing does not occur and you have a tenant you don’t want. Who negotiates the lease? Not me. Property management is a specialty, and it’s not mine. I refer my clients to a professional property manager, or they make their own lease if they are experienced with rentals.
Should a short sale seller allow early occupancy? It's not my decision, but I’ve had several successful short sales where the seller did negotiate early occupancy and allowed the buyer to move in early. In these cases, we knew the short sale was likely to be approved, the buyer was pre-approved for a mortgage, the earnest money was deposited, the inspection contingency was removed, and of course, there was a lease.
If you are considering short sale to avoid foreclosure, be sure to consult an attorney and an experienced Destin Florida short sale agent.
It's Wendy!
Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-487-9639 or local 850-650-7883 ext 204
Email Wendy: itswendy@rulnickrealty.com


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