It's Almost ALL Yours

You're buying home, but the seller needs occupancy in order to sell their home. It's quite common, actually. And it's somewhat of a cyclical problem.

First, a seller doesn't want to sell their home to a buyer who needs to sell their home. There is a risk in accepting an offer such as that. If the buyer #2 walks, the sale of buyer #1's (your buyer) home falls apart. This leaves most sellers in a predicament of waiting for buyer #1's offer to become more solid, to have conditional approval for example, before they can shop for a home.

Say we get through all of that, and your seller finally has an offer on a home they'd like to purchase, seller #2 most likely needs to find a place to live- and, you guessed it, the 3rd set of sellers would need to find a home, too!

Even if the next home has immediate occupancy, your seller is most likely going to be about 3 weeks behind on the financing process compared to your mortgage situation. A loan takes between 30-60 days to close, depending on the type of loan and lender. Rather than being displaced for a few weeks, the seller requires a post-closing occupancy agreement in order to sell their home.

A post-closing occupancy agreement is an agreement that the seller will essentially rent the home back from you for a certain period of time, for a certain amount of money.

While we know it's common for sellers to request occupancy, it is uncommon that most purchasers know exactly how to protect themselves in this situation. Here's what your post occupancy agreement should include:

1. A definite period of time. Seller shall remain in home "this many" days after close. Closing day being day 1.

2. A specific dollar amount for a charge. Flat fee or per day? Per day is most common.

3. What if they don't leave?! You have to evict them! Which takes time and can become costly to you.

-To prevent this, consider asking for a higher per day rate than your PITI, to cover any unexpected costs incurred.

- You should also consider having a hold-over rate of 1.5x the total occupancy to be held in escrow, to encourage the seller to keep their end of the deal.

4. The seller should continue homeowner's insurance through the date of the key exchange. And there should be language in the post-close occupancy agreement to reflect these expectations.

5. You might also consider a damage deposit. If a seller damages the property after close, technically they're outside of the purchase contract and the condition of the home clause doesn't apply. To cover any incidents, most purchasers request a damage deposit of $500-1,000.

All of this seems very overwhelming and most likely unnecessary. You should expect most sellers want to sell their home and will leave their home amicably. However it's important to expect the unexpected.

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