Have an Offer: How to Proceed
I finally have a serious offer on my house, but I am not sure how to proceed. One issue is I am a bit doubtful that the person who made an offer will be able to get the mortgage. They have quite a bit of cash, but they do not have a steady job and…
I finally have a serious offer on my house, but I am not sure how to proceed. One issue is I am a bit doubtful that the person who made an offer will be able to get the mortgage. They have quite a bit of cash, but they do not have a steady job and that might be problematic especially since I’ve been hearing horror stories in regards to people unable to secure funds from banks these days. Another potential issue is that they are asking if I would let them live in my empty house while we are in contract until the sale. I do not mind that (they will be paying rent although it wont cover my expenses), but what if the sale does not go through and then I am unable to show the house to potential buyers or they are unable to move out on time.
I wonder if it would be ok, if I would include a clause (in the sale contract) whereby I keep some type of deposit if a buyer fails to secure a mortgage. Or it wont be a reasonable thing to do.
I would be grateful for any advice.
Thank you.
So, did you just list your house with a real estate agency and let them put it on NYTimes website? Or did they poach your listing?
I know readers may be skeptic but contrary to what people may believe there still are stated income loans out there for buyers with large down payments. I am in the mortgage business. If the loan will be under 60% LTV and the loan will be under $1,000,000, the buyer has semi decent credir (semi) and the buyer is self employed it can be done. Rate wouldn’t be the greatest, 6% with a point but the deal can happen. You shouldn’t ever let the buyer move in though before they close. If the deal falls through you will never be able to sell the place or get them out.
Why would a buyer ever give the seller 2 years of their tax returns? Unless the seller is the underwriter, that’s ridiculous. Pre-approval and 10% escrow should be sufficient with normal contingency clauses for buyer/seller. I’m sure your RE agent is telling you otherwise.
Suprisingly, I do agree with not renting to the potential buyer.
Well, most posters make sense. If I were you, I wouldn’t have given the offer serious thought until they got some sort of pre-approval for a mortgage as I’m sure your buyer would want a mortgage contingency.
As for renting. As the others have said – NO WAY. Do you really want to show a house that’s occupied by someone who failed to purchase it? You said that the rent wouldn’t cover the expenses. If you’re serious about selling your house – no.
Speak to your lawyer.
Call your lawyer.
Sounds like your prospective buyers will have a complicated time getting a mortgage if they are able to get one at all. I would either get a pre-approval from them before you accept their offer or make sure your contract has no mortgage contingency so if they can’t close, you keep the deposit.
You could do the pre-closing rent if you really want but make sure they at least cover your expenses and get a very good rental contract from your lawyer – and make them put a good bit of $$ in escrow so that in case things fall apart or get ruined, you’ll be covered.
Good luck
Nuts to all the naysayers. you have 10% of the sale price, don’t you? How many months of rent is that? Specify that there will be a substantial penalty if the sale falls thru and the house is not vacated in 30 days. What could be simpler?
Why does everyone assume the worst? Presumably you have met these people; they want the house (“serious buyer” in your words); they have the incentive to close.
On a minor level, I just rented my apt as of 3/15 and tenants wanted to move on the weekend before. I didn’t sweat it.
In this market, without a creative banker, sounds like your buyer may have a tough time securing financing, unless, perhaps, they are putting down a large deposit. I would be hesitant to let them rent during the contract period unless there is no mortgage contingency. If there is none, perhaps you could have a clause in the sales contract that in the event that buyer fails to close, the deposit only gets returned once they have vacated the property and all rent arrears are satisfied. Since your lawyer will be holding the deposit in escrow, you should be pretty well protected. You should also write and actually lease so that you have a commanding document should you actually have a landlord/tenant court dispute.
Michael Vinocur
Building Equity LLC
mvinocur@buildingequitynyc.com
No to the rental idea for all the reasons already posted. Keep it very simple. Why give the prospective buyer time in the unsold house to find things they don’t like/ might claim aren’t right to allow for renegotiating terms?
And why not try to eliminate or modify the mortgage contingency clause in your favor?
Arkady, that’s hilarious. I know what you mean.