By Meredith Caruso
Some homeowners jumped into today’s hot sellers’ market, fielded multiple offers, got top dollar and signed contracts within 48 hours. At the time, they may have considered their next home selection “a bridge we’ll cross when we come to it.” But sometimes there’s no bridge.
2020 was a heckuva year. Everyone’s daily routine had to be adjusted thanks to the pandemic. One thing that remained solid, however, was the real estate industry. The market, in a word, is HOT.
While this is a good thing, to be sure, the Legal Hotline has received an uptick in calls regarding sellers who eagerly list their home to get top dollar – but then, come closing day, they haven’t found a place to move. This can only lead to costly legal issues, which we all want to avoid.
So how can you help avoid this problem? I’ve said it before and I will say it again: PLAN AHEAD.
I get it, as an agent, securing a listing is “having a great day.” But in a time when properties are on the market less than 48 hours after several competitive offers come in, it’s important to have a frank discussion with your sellers about their plans. Do they have eyes on another property? What do they intend to do – buy or rent? Are they moving out of state? Do they have an agent they’re actively working with to find a new home? How far along in the process are they?
When should these questions be asked? I’d wager that they should be asked at the time the listing is taken and not 25 days into a contract.
Unfortunately, some sellers may be so pumped about the hot market and getting the best offer that they aren’t thinking about their long-term plans. As a listing agent, you should be incorporating these types of questions when you are taking the listing so you are on the same page as the seller.
If you’re representing the buyer, I’d suggest communicating regularly with the listing agent regarding the sellers’ progress on moving out. Schedule your walk through to occur the day before or the day of closing, and schedule it well in advance.
Sure, there are alternatives that might work in the event the seller is unable to find a new property to move to – however, those alternatives all involve cooperation of the parties. A seller may be able to get a specialized lease drafted that provides for the seller to rent back the property from the buyer until a new property is located. The parties can also agree to an extension of the closing date – but this may not work with buyers who are financing their purchase if the lender increases any loan costs as a result of the closing delay.
And, of course, both of these are more viable options if the sellers already are under contract on a new home or simply need a few more days to move out. The sellers who have no clue where they’re going? They may have a battle ahead.
So, at the risk of beating a dead horse, here is where taking some time in advance to map out the sellers’ intentions can negate a panicked call to the Legal Hotline when, two days before closing, you realize the sellers don’t intend to leave because they don’t have anywhere to go.
Meredith Caruso is Associate General Counsel for Florida Realtors