Buying and Selling a house can be a stressful, time consuming event. Very often, a Buyer/Seller will experience both on the same day. When a person sells and buys on the same day, they are said to have closed “back-to-back.” There are many moving parts: lenders funds, buyers funds, movers, recording, final walk-throughs, and the list goes on. It is, unfortunately, often the case that the second transaction is not recorded on the closing date. This often causes tempers to flare and Buyers left scrambling. This week, we’re going to tackle a few tips that will help ease the logistic burden of closing a back-to-back transaction.
- Be Flexible: This is quite possibly the most important tip we could give. Flexibility comes in many forms. Perhaps closing at an unusual location could result in a smoother transaction. Perhaps conducting your walk-through the night before the closing date could free up additional time. Flexibility serves two purposes: 1) it allows the process to flow more organically. Stubbornly holding onto preliminary closing times and locations can actually lessen the likelihood that the second transaction will be recorded as originally planned. 2) Being flexible helps to garner goodwill with the other parties involved in the transactions. A Buyer who agrees to meet at a time and place convenient for the Seller is often repaid with flexibility in terms of moving in early.
- Remember that Recording and Transferring Funds is Not Instantaneous: In order for a closing attorney to record a deed, that attorney must be “funded”; that is, the attorney must have the lender’s funds and the Buyer’s funds in their escrow account at the time of recording. In the case of a back-to-back closing, funds from the first transaction must be sent to the closing attorney for the second. There are two sources of delay: 1) recording the first deed can take time because of the need to wait for funds or for the act of recording to be completed, and 2) wire transfers through Fedwire (the Federal Reserve Bank’s funds transfer system) usually takes an hour or two to be completed. With all of these steps, recording the deed for the second transaction can often be delayed.
- Negotiate a Use and Occupancy Agreement at the Time of the Offer: a Use and Occupancy Agreement allows a Buyer to move in early or a Seller to stay after closing. Rather than trying to record both transactions on the same day, consider building an extra day into the schedule by either asking to stay after your sale or move in prior to your purchase.
- Plan to Stay at a Hotel for One Night: Moving is stressful. Nothing is worse than having the sinking feeling of having no where to go when your purchase can’t be recorded on the day of closing. Consider scheduling your purchase a day or two after your sale and booking a hotel for a night or two. Your movers will gladly hold your items for a modest fee, usually a couple of hundred dollars. With any luck, the hotel that you choose will have a spa where you can enjoy a well-deserved massage between closings.
- Do Not Close on Friday or the Last Day of the Month: I think this may be the most common tip that I give to Buyers and Sellers: Do not close on the last day of the month. I’m going to borrow from a former First Lady: “just say no.” For various reasons, which we’ve outlined here, Buyers see a false economy by closing on the last day of the month. The problem is that lenders are usually very busy, registries and recording ques are filled, and closing attorneys have less time to devote to your file. Even closing a few days before the end of the month or on a random Wednesday tends to result in smoother, more timely closing.
While back-to-back closings pose several challenges, they are certainly possible. Careful planning, flexibility, and a few tricks helps to reduce stress, resulting in a smoother selling and buying process.
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Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.
Copyright © 2016 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.