In my real estate practice there is nothing more difficult than saying to a client who is on a moving truck on their way to their new home that because their sale could not close that day, we do not have the funds to close their purchase, so they have to go to a hotel for the weekend and store their furniture.
The good news is that this can be avoided if the proper steps are taken in advance. Here are four steps to remember to avoid this happening to you.
Avoid buying and selling on the same day.
Whenever possible, close your purchase a few days ahead of your sale and arrange bridge financing. Your lender will in most cases be happy to assist you, as long as you have signed an agreement to sell your home. The cost will usually be $2-300 dollars and is well worth it. You will likely save much more in reduced moving costs and there will be less likelihood that items will be damaged, which is usually what happens when you try and rush a move from one home to another on the same day. You will also avoid headaches with trying to schedule a move in time at a condominium, which is usually only available for a 2 hour period and is very difficult to predict when buying and selling on the same day.
Ask your seller if they need the money to close another deal.
If you must close both your deals on the same day, ask your seller whether they need the money for their own purchase the same day. If the answer is yes, it puts a lot more pressure on you to close your deal on time, since the seller could face their own penalties if they have to delay their purchase transaction.
Ask your buyer if they are also selling the same day.
Similarly, your ability to close your purchase is dependent on your buyer being able to close with you. So ask in advance if the buyer has to sell their own house the same day or whether they have arranged their own bridge financing. You do not want to be a part of what we call a real estate train wreck, where the failure of one buyer to close causes multiple deals not to close as well, as they are all dependent on each other.
Get the paperwork to your lawyer early in the process
When clients send me the paperwork in advance, we will immediately review deals that are scheduled to close on the same day and alert the other lawyers involved early in the process so that if an extension is required for any reason, it is done as early as possible, to avoid increased costs or damages that may occur.
By understanding how to avoid the pitfalls of buying and selling on the same day, it will ensure that your next move to a new home is a happy one.
Mark’s Contact Information
Mark Weisleder is a Partner, author and speaker at the law firm Real Estate Lawyers.ca LLP. Contact him at firstname.lastname@example.org or 1.888.876.5529
With my partners at Real Estate Lawyers.ca LLP, I am now able to close real estate transactions all across Ontario with our 29 Offices & Free Mobile Signing Service and I appreciate your trust in referring your clients to me.
If you have any stories to share about the housing market or just need some advice, please contact me at email@example.com