Who Pays When Buyers Must Wait before Moving into a New Home?
By Saghir A. Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities.)
With contingencies more of the norm in today’s market, the timing and logistics of moving become a puzzle. Depending on how many houses are selling and how many people are moving from one to the next, it can be something of a challenge to make sure no one is left with his belongings in the front yard of his new home because the current occupants were unable to move into their new home.
Let’s say you have four closings tied together, with proceeds from the first sale needed to close the second scale, then the proceeds from the second scale needed to close the second scale, then the proceeds from the second scale needed to close the third scale and finally the proceeds from the third scale needed to close the fourth scale. So, while the first buyer starts the domino effect of moving the money from one purchase to the next, the last sellers in the chain are the first to move.
Most people don’t want to go through the hassle and expense of moving twice, or of moving into and then out of short-term storage or those large moving pods. In most cases, everyone just stays where he is until his new house is empty, and he can go from one to the other. Because no one can move until after the last seller close escrow, this creates a chain reaction down the line. The third sellers have to wait for the fourth sellers to move, forcing them to ask their buyers to delay their move. By the time you add up all the days of waiting the first buyers may have to wait two weeks or more to move. Mind you, their new mortgage is not waiting for them to move in before they start paying, and most buyers would want to be made “whole” or “neutral” on the money front.
None of these buyers ‘mortgage holders are giving anybody a pass on paying. Who pays for all of this time?
One simple way to make it fair for everyone is to figure out who’s asking for more time than is normal and customary and pass along a credit as each transaction closes. The first buyers most likely will receive the largest credit because they most likely will be paying the longest for a house they don’t yet live in. The payment most likely will be in the form of a credit to the buyers at closing, reducing their closing costs. Whom does the credit come from? That’s between the Realtors and their clients to figure out.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
