|
|
Should You Allow Buyer To Rent During Closing?
Should You Allow Buyer To Rent During Closing?
It's not uncommon for an investor to sell a house and have the buyer request the right to rent and occupy the property while the closing is being completed.
You're a bad guy if you refuse and often in hot water of you agree. Here are the potential problems with renting before closing:
1. Buyer is in the home for two months and then the potential lender decides the buyer can't qualify for the mortgage loan. Now that's bad news!
2. Buyer is in the home for two months... gets a bad case of buyer's remorse and wants out of the deal. Now that's bad news!
3. Buyer is in the home for two months and comes to the closing table with a long list of needed repairs he has discovered during residency. Now that's bad news!
4. Buyer is in the home for two months during which time he does serious damage to the property and then disappears. Now that's bad news!
Is there any good news? Well, you are getting rent money for those two or so months.
Let's check the score card:
Bad News = 4
Good News = 1
I would say that the investor comes out on the short end of that game. Let's agree that the only time you rent during closing is if you are in dire need of that rental income.
If you must rent then you must carefully prepare a lease agreement. No handshake deals allowed!
If the buyer/renter refuses to close the deal for any reason, the only way you can get them out of the property is if you have a rental agreement that gives you the right to evict. It must also be a short term lease, so there is no misunderstanding about the buyer/renter remaining in the property if the deal goes bad.
In the purchase agreement you must spell out exactly, in a dollar amount, what repairs or improvements you will pay for. The agreement should indicate the buyer has had an inspection period and is buying subject to your limits on repairs and costs... now and in the future. If legitimate defects are found in the property during the rental period you can negotiate a solution.
You must collect sufficient security deposit to cover rent and potential damage the renter/buyer might inflict upon the property.
Look, if for some reason you feel you must accommodate the buyer during the closing period… pay for a motel room. Chances are it will be far cheaper in the long rund.
About the Author
Mark Walters is an investor-entrepreneur helping other investors from his Web pages at http://www.Lease-Option-Sub2.com
Real Estate Live (Washington Post)
Welcome to Real Estate Live, an online discussion of the Washington area housing market with Post Real Estate editor Maryann Haggerty.
U.S. Mortgage Meltdown Slams Bank Of China (Forbes)
Bank of China was the most vulnerable of its peers, thanks to the U.S. subprime mortgage crisis. Discrimination Suit Against Subprime Mortgage Lender Remanded to State Court (Law.com via Yahoo! Finance)
Subprime mortgage lender Option One Mortgage Corp. and former parent company H&R Block will face a groundbreaking discrimination case over its lending practices to blacks and Latinos in Massachusetts state court instead of its preferred venue, federal court. FHA raises mortgage insurance fee to 1.75% (San Francisco Chronicle)
Borrowers who take out government-insured mortgages will have to pay higher fees under new rules announced this week. Effective Oct. 1, the Federal Housing Administration will raise its mortgage insurance fee to 1.75 percent for a new mortgages and many... Darling, Flint May Announce U.K. `Mortgage Rescue,' Times Says (Bloomberg.com)
Aug. 29 (Bloomberg) -- Chancellor of the Exchequer Alistair Darling and Housing Minister Caroline Flint are proposing next week to announce emergency measures for the U.K. mortgage market, the London-based Times reported, without saying where it got the information. Discrimination Suit Against Subprime Mortgage Lender Remanded to State Court (Law.com)
Subprime mortgage lender Option One Mortgage Corp. and former parent company H&R Block will face a groundbreaking discrimination case over its lending practices to blacks and Latinos in Massachusetts state court instead of its preferred venue, federal court. The Massachusetts attorney general's office filed the lawsuit against Option and H&R Block for allegedly selling predatory loan products to ...
Home page
Information Index
|
|