By Ken Yee
Lately, the real estate market in the Atlanta suburbs is going crazy. Property values are increasing faster than before and inventory on the market is getting snapped up with low ‘days on market’. It appears as if the real estate market is on steroid again. Good for the Sellers, but not too good for the Buyers. With it being a Seller’s market, we noticed a trend where more Sellers are making demands to go with the sale. The most common demand we have seen lately requires that the Buyer allows the Seller to stay back for a week or two past the closing date. In other words, they want time AFTER the sale to vacate the property that they are selling to the Buyer. Buyers, on the other end are somewhat held hostage by this demand. Should they refuse the demand, their offer on the ‘hot’ property will probably not be accepted. So, what do Buyers need to know and should they agree to this demand?
First of all, let’s discuss a little about what a Buyer should know before one decides on the demand. Where a lot of people get confused is they failed to understand exactly how this works. Most important thing to know is that the sale of the property and the Seller staying back after the sale are two completely different transactions. Once the house is sold, the rightful owner of the house is now the Buyer. The Seller will technically be a ‘tenant’ if he/she is allowed to stay in the house past the closing date. Any disputes before the closing is considered a Buyer-Seller dispute, and any disputes after the closing is considered a Landlord-Tenant dispute. That is the main difference between the two transactions. The former can be easily resolved by the real estate agents and closing attorneys based on the Purchased and Sale Agreement, while the latter will have to be resolved via the Magistrate Court or a Small Claims Court.
So, shall you agree to the Seller’s demand that they stay back after the closing? Let me just emphasize that I am starting to see more of this demand by the Seller, so it is not uncommon. In fact, my wonderful wife and business partner Bee had helped our Buyer clients navigate through this process multiple times. The main concern raised by our Clients that faced this situation is about the property being damaged during the Seller’s move out process.
The reality is, it is very possible there will be some kind of damages caused by the Seller (or the movers) when big furniture and appliances are being moved around. In fact, based on our past experiences, it was somewhat certain that ‘something’ is bound to happen to the property when Seller vacates the property after closing. That is just the reality one must accept. So please do not assume nothing will happen even if others assured you of so.
The expectation should be that there will be some kind of flaws whether the Seller vacates right before closing or after the closing. Unless you are buying a new home, resale homes generally have some flaws. Also, if the house is occupied when you made the offer, it is fair to assume some flaws are easily being overlooked at because of all the personal belongings and furniture in the house. The rugs may be covering some scratches on the hardwood floors and the appliances may have been placed over some cracks or holes on the wall. So, one should not expect an esthetically flawless house when making an offer on an occupied property. However, it is fair to expect the general conditions of the house remains the same after the Seller vacates the property.
The fact is, once the property is sold, the Seller has no obligations to agree to any of your additional demands. The Purchase and Sale Agreement pertains only to the purchase and sale of the property, not the requests thereafter. It is important to have a temporary occupancy agreement in place with the Seller if he/she is to occupy the property past the closing date. With that, the ‘Tenant-Landlord’ relationship is established and the process is formalized. Your real estate agent should guide you through this important step. Additional provisions can be included in the temporary occupancy agreement to further protect the new owner in case severe damages are done to the property during the move out process. The temporary occupancy agreement is also important to the new owner in case of an unfortunate situation where this turns into a nasty event.
The decision is really a matter of personal preference in addition to a combination of other factors. We would suggest you discuss this matter with your real estate agent if you have any other concerns beyond what we have discussed here. Knowing that there are risks associated to it, our suggestion is to have your real estate agent help you manage the risks and minimize the problems if you choose to pursue that dream house with this kind of condition on it. The good news is that we have not encountered any situation where our Buyer Clients regret their decisions.
My name is Ken and my wife is Bee. I’m a Civil Engineer turned real estate investor and my wife is an IT Professional turned Realtor. Feel free to drop us your real estate questions at gat@gaiantimes.com
DISCLAIMER: This article is written based on our personal and professional opinions. We are not certified financial advisors and are not qualified to provide financial or legal advice.
