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So you’ve sold your house, gone through closing, and are ready to move on with the next chapter of your life. But does the buyer just sign the documents and immediately walk into your home? Do you have time to say one final goodbye to your old home? Do you have to finalize anything else before you vacate?
The period between closing and moving out is somewhat of a gray area. The buyer might feel anxious to move in, and the seller may not be in a rush to move out. Every real estate transaction is unique and the people involved in each have different priorities. That’s why it’s very important to lay out all of the expectations in writing before the closing date. If you need a little time to find a new home or your new home’s move-in date is a few weeks after closing, it should all be in writing so the buyer knows exactly when they can move in.
In this piece, we’ll explore what home sellers need to do after closing, including how long you can stay in the house after the sale is finalized, and what you need to do to ensure a smooth transition — including if you intend to do a sales-leaseback transaction. (Don’t worry, we’ll explain what that is.)
What does a seller have to do to close a real estate transaction?
After your home has been on the market for a bit, you’re probably ready to get up and move out as soon as you accept an offer. But hold your horses, there are a few things you need to do and consider before moving out. Accepting an offer is just the first step.
As the seller, you’re responsible for negotiating, agreeing to, and signing all the necessary closing papers. But before that, you should start packing up everything that isn’t going to stay behind. (If you haven’t found a new place to live, you should get moving on that too!) After you’re packed up and have signed all the papers, then you can move out.
When does closing happen?
Once you accept a buyer’s offer, it’s time to draw up the paperwork. Your respective real estate agents and attorneys will work on the purchase contract while the buyer’s bank will work to finalize their loan.
The type of mortgage and the lender the buyer uses can impact how soon closing occurs after the offer is accepted but most federally backed loans close in 30 days. Special programs like a first-time home buyer program may take 35 to 45 days.
This is the period when a seller should indicate if they need more time to move than the 30-day window to draw up the purchase contract. Negotiating it upfront gives both buyer and seller transparency into the next steps after closing. If you don’t clarify, the buyer might expect to move in right after closing.
Can a seller stay in the house after closing?
The short answer: Yes, a seller can stay in the house after closing, but only if it has been negotiated. Technically, unless it’s stated otherwise in the purchase contract, the buyer can move into the house the second they receive the keys at the closing table.
If you know you’ll need some time in the house after closing, either because you aren’t done moving or the closing date on their new home occurs later, you should complete a “use and occupancy” agreement. This states that even though the house is sold to someone else, the seller can stay for a specific amount of time to finish up what they need to finish up.
Buyers may try to charge you a per diem or offer other financial incentives to get you to move out faster, but if you’ve negotiated a use and occupancy agreement, you can stay in the house after closing.
Can the seller delay closing?
Staying in the home after closing isn’t ideal for anybody and may end up costing the seller money. In some instances, if you can see things aren’t lining up how you planned, you can push to delay closing. Remember, the purchase contract states the closing date, so if you’ve already signed it, you’ll have to tear it up and reopen negotiations. Newer real estate brokerages like Orchard offer services to help you buy a new home before you’ve sold your old one to help alleviate some of the stress of lining up multiple closings.
Sometimes, pushing the closing date is fine with a buyer, especially if they’d like to perform additional inspections or need time to settle a mortgage.
While there’s no maximum to the number of times you can extend closing or how much extra time you can ask for, you should be respectful. The buyer doesn’t want to wait forever to move in and if you keep delaying, they will likely try to work financial concessions into the purchase contract to force you out. They could even choose to walk away from the deal.
Sellers have ample opportunity to extend the closing window and negotiate a use and occupancy contract while the purchase contract is still being written, so it’s important to use that time in good faith. After you sign the purchase contract and set the closing date, the buyer has greater leverage. If you fail to move out after the agreed-upon time, the buyer can take legal action against you.
What is a sale-leaseback transaction?
In some situations, a home seller and buyer may prefer to settle for a sale-leaseback agreement in their transaction.
In real estate, a sale-leaseback (also known as a rent-back) is a financial transaction in which a homeowner sells their home and then rents it back from the new owner. This agreement allows a person to sell their property to a buyer, and then continue to occupy the property for a pre-negotiated period while paying rent.
This type of arrangement can be both short- or long-term, but short-term leaseback agreements have become more popular since the onset of the COVID-19 pandemic. In a hectic, high-stress housing market, leasebacks allowed owners to sell their property but stay there for a few months to have greater flexibility searching for a new home during a pandemic.
Leaseback agreements are most often for just a few weeks, but could extend for a few months or even indefinitely. Some lenders, however, only permit sale-leasebacks up to two months unless the borrower applies for a loan as an investor. In those rare cases in which an investor doesn’t intend to ever live in the house, the seller can stay long-term as long as they pay rent.
Leasebacks can benefit both buyer and seller in certain situations. As a seller, you can cash in on your accumulated home equity or on an increase in value of your property while having a little extra time to find a new home. Not only do you have that extra flexibility, but you won’t be responsible for maintenance costs, property taxes, and other homeownership complications during the leaseback period.
For buyers, offering such an arrangement can give them a leg up on the competition if there is a bidding war on a home. Giving the seller that convenience might make all the difference in your offer. Additionally, if a buyer wants to make an investment, they can add a property to their portfolio that’s already occupied by someone they know respects the space. They won’t have to search for a tenant to start receiving rent right away.
If you’re thinking about selling your home for an influx of capital but you don’t want to leave or start searching for a new home, a sale-leaseback is a compelling option. However, it’s very likely that a professional investor or real estate group will be the only buyers with enough cash to buy a house and not live in it. Be careful who you choose to be your landlords.
How does a sale-leaseback agreement work?
To do a sale-leaseback transaction, you need two related agreements. First, the property’s current owner agrees to sell the property to a buyer for a fixed price. Then, the new owner agrees to lease the property back to the former owner under a rent-back agreement. That’s where the name “sale-leaseback” comes from; you have a sale agreement, and then a leaseback agreement.
When you sell your house, unless you’ve agreed to stay in it as a lessee, you have to move on eventually. But that gray area of how long a seller can stay in the house after closing can be confusing. The easiest answer is that you can stay as long as you negotiate with the buyer. Most buyers won’t give you much more than a few weeks, but if you know you need a little time to arrange your next home, it’s best to be transparent and upfront well before closing day.