Planning To Sleep In Your New Home Tonight...What's Plan B?

By
Real Estate Agent with Allen Tate Realtors Chapel Hill, NC 919-819-8199

It's Closing Day! Everything has gone like clockwork and you have nothing but the formalities of closing between you and home ownership! The mover's truck is in the driveway and your family and friends have gathered to help you move in. Tonight you will spend your first night in your new home!

Sleeping Lions at the NC Zoo in Asheboro, NC

THE PLAN: You'll spend an hour at your attorney's office with your Realtor, signing all the closing documents, and then you'll be presented with the keys to your new kingdom. You'll head straight to your new home, open the door for the waiting crowd and let the unloading begin! You will happily eat pizza while sitting on the floor, hang sheets over the windows for instant privacy and search high and low for the bath towels that somehow ended up in an unmarked box. But that's all part of the fun. What could possibly mess up this day?!

REALITY: The phone rings just hours before closing. The loan package from the lender has still not arrived at your attorney's office. They cannot prepare your HUD-1 closing statement for signature. The underwriters have been doing their final perusals before issuing the package and releasing the funds you need to buy your home. They have hit a snag. (I'll leave it at that...the form those snags can take in this new world of lending can be myriad.) Your attorney, your lender and your agent all assure you that it will be worked out. But...your closing is going to be delayed! A couple of hours? Maybe. A full day or even two? Possibly.

PLAN B: First, let's talk about what Plan B is NOT. It is NOT that you will call your agent and ask them to get you the keys so you can move in anyway. It is not that you will unload the entire contents of the van into the driveway and wait. The movers need to unload and get on to their next job? I hear you. You have a tight schedule the next day/week/month and NEED to have the initial phase of moving behind you by tonight? I hear that too. The whole family is with you and a hotel will cost you a fortune? Yep, I get it.

Unfortunately this is what you need to hear. The seller still owns the home. This means the seller STILL carries the insurance on the property OR may have canceled it effective this morning. Stuff happens. This new home is unfamiliar territory so how about a worst case scenario; a child or a friend is seriously injured on the property. Someone leaves packing paper on the stove and a fire starts. Insurance only covers “stuff” if they can't prove it isn't their responsibility. Your “stuff” is not the sellers “stuff” and therefore the seller's insurance is most likely NOT going to pay for it, especially if you are in the home without the seller's agreement. Since you do not own the home until you have closed on it, your insurance is most likely not going to pay for anything that happens either, under the theory that you cannot insure what you do not own. A better Plan B is clearly in order.

A BETTER PLAN B: Give yourself a buffer of at least a day between closing and moving in.

Don't close on a Friday because if things go south you will be waiting until Monday to close. (Talk about a quick way to mess up your carefully laid plans!)

If you absolutely must move in on your scheduled closing day, negotiate ahead of time, through the agents involved, exactly what will happen if your closing is delayed. In North Carolina you may be able to negotiate a Buyer Possession Before Closing agreement. Keep in mind that the seller is not required (and in most cases not smart) to give you occupancy until you own the home.

Talk to your insurance agent and ask if there is a plan available that would cover such a scenario.

Above all, understand that some things are simply out of the hands of even the best lenders, agents and attorneys. Plan B may not necessarily be your ideal but it is always better than the alternative...especially if you don't have one!

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SarahGray Lamm is a licensed, full time, residential real estate professional in the Triangle area of North Carolina with over 100,000 hours of experience. She specializes in serving the real estate needs of home sellers, home buyers and investors in Chapel Hill, Carrboro, Durham and Northern Chatham County and is proudly associated with Allen Tate Realtors, the Carolinas #1 independent realty company.

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Disclaimer: Comments and contributions via ActiveRain.com (or other electronic or print media) do not establish an agency relationship with any third party. Blog posts are intended to be informational only. Please be advised that real estate practices vary by region, from state to state and from market to market. The information contained herein does not constitute legal advice. All parties in need of legal, accounting, tax, or real estate guidance are directed to consult with the licensed professional of their choice. Please seek specific guidance from a retained professional in the specific field(s) required to service your interests.

 

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Re-Blogged 10 times:

Re-Blogged By Re-Blogged At
  1. Karen Fiddler, Broker/Realtor 08/14/2010 11:52 AM
  2. Mary Kay Hopkins 08/14/2010 12:11 PM
  3. Roy Kelley 08/14/2010 12:16 PM
  4. Steve and Jan Bachman 08/14/2010 12:25 PM
  5. Dan Schwieder 08/14/2010 01:43 PM
  6. Ellen Dittman 08/14/2010 03:09 PM
  7. Jeff Rainwater 08/14/2010 04:06 PM
  8. Mike & Eve Alexander 08/15/2010 08:37 AM
  9. Joel Weihe 08/19/2010 07:14 PM
  10. Karen Kruschka 09/17/2010 01:18 PM
Topic:
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Show All Comments
Rainmaker
487,038
Lorraine or Loretta Kratz
Crescent Moon Realty, Inc. & Land N Sea Auctions. - San Marcos, CA
Certified Negotiation Consultants

Good information, and as many of your comments state, ever so timely. Congratulation on being feature.

Aug 14, 2010 08:08 PM #43
Rainmaker
230,029
Ken Barker Realtor® GRI, E-Pro Certified
Dilbect Real Estate - Burbank, CA

SarahGray - we have all been there and done that but we learn from our past too. I had one of my first deals closing on a friday and needless to say I ran into the truck staying two extra nights. Not out of my pocket but guess what? I was the bad guy because I would not give up the keys.

Cynthia, I would be livid if I had a buyers agent do that on my sellers home. Oh my.....

Also in my area I have never had to deal with an attorney at closing but I can imagine everyone waiting and waiting on the lenders docs wherever they are to land.

Aug 14, 2010 08:28 PM #44
Rainmaker
977,734
Sharon Alters
Coldwell Banker Vanguard Realty - Fleming Island, FL
Your Fleming Island Relocation Agents.

SarahGray, this is why it is always a good idea to negotiate "3DAC" three days after closing in a contract. It protects both Seller and Buyer, so if there are any hiccups, nobody is on the pavement with a moving van breathing down their necks. Excellent advice to Sellers and Buyers in the Raleigh NC area.

Aug 14, 2010 08:51 PM #45
Ambassador
883,569
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

To start with, I try to NEVER close on Monday or Friday.  That gets rid of a lot of problems.  People usually plan on moving over the weekend, even if they are closing on Wednesday, so that helps.

Aug 14, 2010 09:06 PM #46
Rainmaker
131,096
MeLisa Minter
Carl Thomas and Associates Real Estate - 972-962-2500 - Kaufman, TX
Broker, SFR, Kaufman County Short Sale Specialist

Sarah, I'm glad you wrote this post.  90% of my closing never happen when they are suppose to and even when they do, I'm totally surprised.

There are so many factors that have to line up to complete a real estate transaction, it's a wonder there is not some type of "Realtor Ritual" that we should do to make sure that the closings happen.

I agree that a Plan B is definitely necessary.  I've seen buyers have to spend the night in a model home with their moving van in the builder's parking lot.  Things happen...things that we can't always control.

Aug 14, 2010 09:10 PM #47
Rainmaker
652,646
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

Definitely good to have a plan B -- and the world does not always go according to plans.

Aug 14, 2010 09:19 PM #48
Rainmaker
446,491
Vickie McCartney
Maverick Realty - Owensboro, KY
Broker, Real Estate Agent Owensboro KY

Hi Sarah~  Love this post.  Last minute things happen and can't always be prevented.  As a matter of fact, things can mess up plans at any time!  Buyers, sellers and their agents always have to be quick on their feet!

Aug 14, 2010 10:01 PM #49
Ambassador
830,804
Fred Griffin
Frederick Griffin, Licensed Real Estate Broker - Tallahassee, FL
Licensed Real Estate Broker

Twice I have allowed Buyers to possess before Closing (Florida).

Even with signed written agreements on "standard" forms,   BOTH turned into nightmares.

The first one NEVER closed.  The second - the A/C compressor mysteriously failed during the 2 or 3 day interval - there was no warranty in effect. 

I advise against Occupy Prior to Closing.

Aug 14, 2010 10:29 PM #50
Rainmaker
512,397
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Love the post, and have bookmarked it for the future.  Hey , you just never know what might happen.

Patricia/Seacoast NH

Aug 14, 2010 10:40 PM #51
Rainmaker
130,044
Markita Woods NMLS#190699
WestStar Mortgage Inc NLMS#2925 - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Excellent post...today it seems no matter how hard we try things happen, I too advise buyers to have a plan B, but most times it falls on deaf ears!

Aug 14, 2010 10:54 PM #52
Rainer
90,361
Kathy Kenney
Keller Williams, Princeton, NJ - Robbinsville, NJ
Realtor - Princeton & Central NJ Homes for Sale

Plan B is usually developed in the 11th hour!  Great post and so very true.  With the market being what it is, and the lenders so very cautious today, you have to have a "Plan B"!

Aug 14, 2010 11:43 PM #53
Ambassador
1,565,489
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M
Great advice. A buyer can't plan to move in if the close doesn't happen on time, and it often doesn't.
Aug 15, 2010 02:00 AM #54
Rainer
25,941
Angela Hardy
Prudential Northwest Realty - Bothell, WA

Unfortunatley most buyers do not listen when the need for a back-up plan is discussed. Excitement creates momentary deafness :) I have started having this conversation a second time (or sometimes third time if they talk about visiting relatives helping them with the move, or non-refundable moving truck deposits) as we get closer to closing - just to make sure that they have heard me!

Aug 15, 2010 02:56 AM #55
Rainmaker
260,552
Mike & Eve Alexander
Buyers Broker of Florida - Windermere, FL
Exclusively Representing ONLY Orlando Home Buyers

SarahGray, loved your post! ...and the first one I will re-blog.

I had this happen (again) last month and the "seasoned" listing agent flipped out, like this never happens...got the selller ready to pull the plug because there MUST be something wrong with the loan.

Breath in, breathe out...

Eve in Orlando

Aug 15, 2010 08:34 AM #56
Rainmaker
1,091,027
Ginny Gorman
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

SarahGray you've written a very informational post for buyers & realtors...most back up plans are just 'freaking' out.  Not closing on Friday on ones with a foreclosure or short sale has always been a must for me...

Aug 15, 2010 10:27 AM #57
Ambassador
1,472,389
Karen Kruschka
RE/MAX Real Estate Connections - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"

SarahGray With 34 years under my real estate belt that is one of the first cautions I discuss as we are writing the offer.

Aug 15, 2010 03:00 PM #58
Rainmaker
398,953
Kathryn Acciari
RE/MAX Professional Associates, with offices in Sturbridge, Charlton, Auburn, Spencer, and Shrewsbury - Sturbridge, MA
Realtor - CDPE, CIAS, Sturbridge MA Real Estate

Great post!  I always advise my sellers and buyers to have a back-up plan. 

Hit up relatives for temporary quarters.  Get a storage facility for a month.  Pay the moving company to store your belongings on the truck for a day or two.   Oh, that's the operative word:  Pay.  People don't want to have to pay to have their belongings in temporary storage.  It always comes down to the money required.  Many people would rather chance it, and they end up spending more money than if that had made a plan.  It's a shame.

Aug 15, 2010 04:08 PM #59
Ambassador
896,685
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Realtor - Ann Arbor Real Estate

SarahGray, this is true, that is why we try our best to NOT close on a Friday, then they might be in a hotel over the weekend and not one day.

We discussed at our board meeting starting to add a clause to give the sellers 3 or 4 days to move. We have always had possession on the day of closing and with packages being late, this could be better for both parties.

We shall see....

Aug 15, 2010 05:46 PM #60
Rainmaker
160,565
SarahGray Lamm
Allen Tate Realtors Chapel Hill, NC 919-819-8199 - Chapel Hill, NC
Realtor - 100K Hours of NC Real Estate Experience

Dear Consumer, thanks for stopping to comment! Would that it was that simple. Unfortunately in this lending environment the consumers right to an advance copy of the HUD-1 is often met merely hours before the scheduled closing. Your agent should be ready to review it with you whenever it arrives and closing should not take place until you have had that opportunity. Lenders today are conducting last minute checks and reverifications of information, which they have previously collected from the consumer, in order to protect their own interest. When this happens depends on the lender, the underwriters they use and can frequently be compromised by a buyer who makes a last minute large purchase, like furniture for the new home, or one of the buyers quits a job or sells a business which was used to qualify for the loan.

I agree that your surmise regarding having a HUD-1 a full day before is a safe bet for a smooth closing, it simply doesn't happen often and influencing a underwriter who is doing the last minute processing on a stack of loans is not as simple as asserting your rights.

In my last 25 closings I have had two delays. One was my buyer and one was my listing. There were circumstances which were well beyond the control or influence of agent, lender or attorney. In the case of my buyer it was beyond their control as well. Most often these days I am very happy if we get a HUD-1 the night before. I do not spend my time simply hoping for one but am actively engaged with the lender rep throughout the entire process. It is for this reason that I usually know how things are progressing. As I said in the post though, stuff happens.   

It would be nice if the world worked the way it was planned but anyone in real estate for any length of time understands that flexibility and patience are the keys to success. I stand by my suggestion that having a Plan B is in the best interest of the consumer and it is better to have that plan in place BEFORE you are only getting one days notice!

Aug 18, 2010 06:42 PM #61
Rainmaker
250,474
Joel Weihe
Realty World Alliance - Wichita, KS
Helping you to use your VA home loan benefits

Reblogging!!! So important a reminder!  Thanks for sharing!

 

I just had one delayed by 10 days.... Thankfully the sellers are all settled in their new home.  But their bridge loan is tacking fees on like crazy.  And the buyers are sitting in a moving truck, with nothing but an air mattress in their old home, because the buyers of Their house were using BOA.   Tomorrow we close and everyone can finally get settled in.  But whew, what a mess!!  We had a HUD... unfortunately, the closing down the line from us did not. 

 

 

Aug 19, 2010 07:17 PM #62
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Rainmaker
160,565

SarahGray Lamm

Realtor - 100K Hours of NC Real Estate Experience
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