Sunday, February 26, 2012

Give Me the Key! Why Immediate Possession is a Good Thing in Real Estate

First Time Homebuyer Question What is Immediate Possession?

Today people want everything NOW! There are drive thru windows for quick meals. We communicate with instant messaging and texts. Americans are trained for immediate gratification in our daily lives. As a Minnesota REALTOR® I try my best to get people to slow down throughout the homebuying process. But when it comes to handing over the keys, I strongly recommend my clients ask for immediate possession.

Immediate possession after closings is good  for both the homebuyer and homeseller in a real estate transaction. In Minnesota, time of possession of the property is negotiated.  But it is in everyone’s best interest that the buyer be given the keys to the home at the time of closing along with full possession to access the property.

As a REALTOR® who works with first time homebuyers, move up homebuyers, downsizing homesellers and everyone in between, it has been part of my job to navigate the moving day obstacle course for clients on more than one occasion. From time to time there will be a chain of transactions that all will close on the same day…i.e. The first time homebuyer is purchasing from a homeseller who then goes to the next closing to become a homebuyer, After the second closing, the seller will become the buyer in a third closing…sometimes the chain can be longer too. This "chain of home sales" can have kinks in it when homesellers don’t understand possession they negotiated their move out time at the time the purchase agreement was written.

Minnesota purchase agreements allow the possession time to be negotiated. Whether working with a homebuyer I always recommend that we ask for immediate possession of the property at the time of the closing. When reviewing a purchase agreement with a homeseller, I always recommend giving over full possession to the new home buyer immediate after closing.

In this scenario a homebuyer will go to the final walk through, check out the home,  drive directly to the closing, sign the papers, get the keys and be able to move right in to their new home. The homeseller being completely moved out of the home prior to the walkthrough limits conflicts and/or potential property damage during the move out.

On occasion, a homeseller will request 24 hours or more after the closing to have all personal property removed from the home. An agreeable buyer might think this is being accommodating to the seller but it can cause problems for both parties. Here's why: the buyers now own the home and now the new homeowners' insurance policy in place. What if something of the seller's is stolen? What if the house is damaged by movers? What if the sellers don't get everything out in the specified time frame? How is the situation resolved when there is a loss and the transaction is complete? Unfortunately, there is no easy answer and these situations can get ugly and end up in court.

Here are just a few examples of situations that I know have occured when full possession was not immediate.

  1. Pets left unattended in home. Sellers arrived to the closing and told the buyers they would need to stop to pick up the last load of laundry and their dog after the closing. They were going to use the electronic entry on the garage to get into the home. The buyers said okay as they had to do errands prior to moving in. When the buyers arrived to their new home later that afternoon, they had quite a nasty surprise. The seller’s dog had been left unattended in the second bedroom for several hours and had soiled the light colored carpet. The sellers did not clean it up and left as a welcome gift for the new home owners.
  2. Irresponsible Previous Owners Though immediate possession had been written into the purchase agreement, at the closing table the homebuyer graciously offer that the homesellers take their time getting their last few items out as they didn't plan to move in for a few days. When they arrived at their new home later in the week, the seller had left all of their garbage inside of the garage and the every door to the home unlocked. Luckily the home had not been damaged but as it was in late August and very warm, it took several days for nasty smell out of the home and the buyer was stuck paying for the trash removal.
  3. Squatters! Homebuyers for a large family home were agreeable to allowing an additional weekend for the homesellers remove the remaining personal items to their new home. But when the homebuyers came to get the keys because the sellers were obviously moved out, the sellers refused to relinquish the final set. It wasn’t that they needed more time to get their possessions; they just sat in the driveway of their old home drinking beer with the neighbors for several evenings until the agreed four day possession time ran out. During this time they flat out refused to let the homebuyers into their new home.
I could give additional examples but it becomes obvious that, immediate possession is designed to prevent problems. Sure in the first two instances, if a buyer had not agreed to arbitration, they could go to small claims court to get reimbursed for the damaged carpeting or trash removal fees. But those remedies take time and cause additional frustration. After weeks of waiting to move into a dream home, having a previous owner with lack of sense and compassion can make a homebuyer crazy. Immediate possession is the tool to prevent these situations. Concessions can be negotiated at closing if the final walkthrough doesn’t go as planned but once the paperwork is signed, if a problem arises, it will be up to the legal system to come up with a resolution.

So take as much time as necessary when reviewing the details of the homebuying transaction but insist on immediate possession at the closing. It protects buyers and sellers in the real estate transaction. In this part of the home buying process, demanding the keys for immediate gratification is a very good thing! 

Copyright 2012