Should You Allow Buyer To Rent During Closing?

It's not uncommon for an investor to sell a house and have the buyer request the right to rent and occupy the property while the closing is being completed.

You're a bad guy if you refuse and often in hot water of you agree. Here are the potential problems with renting before closing:

1. Buyer is in the home for two months and then the potential lender decides the buyer can't qualify for the mortgage loan. Now that's bad news!

2. Buyer is in the home for two months... gets a bad case of buyer's remorse and wants out of the deal. Now that's bad news!

3. Buyer is in the home for two months and comes to the closing table with a long list of needed repairs he has discovered during residency. Now that's bad news!

4. Buyer is in the home for two months during which time he does serious damage to the property and then disappears. Now that's bad news!

Is there any good news? Well, you are getting rent money for those two or so months.

Let's check the score card:

Bad News = 4Good News = 1

I would say that the investor comes out on the short end of that game. Let's agree that the only time you rent during closing is if you are in dire need of that rental income.

If you must rent then you must carefully prepare a lease agreement. No handshake deals allowed!

If the buyer/renter refuses to close the deal for any reason, the only way you can get them out of the property is if you have a rental agreement that gives you the right to evict. It must also be a short term lease, so there is no misunderstanding about the buyer/renter remaining in the property if the deal goes bad.

In the purchase agreement you must spell out exactly, in a dollar amount, what repairs or improvements you will pay for. The agreement should indicate the buyer has had an inspection period and is buying subject to your limits on repairs and costs... now and in the future. If legitimate defects are found in the property during the rental period you can negotiate a solution.

You must collect sufficient security deposit to cover rent and potential damage the renter/buyer might inflict upon the property.

Look, if for some reason you feel you must accommodate the buyer during the closing period? pay for a motel room. Chances are it will be far cheaper in the long rund.

Mark Walters is an investor-entrepreneur helping other investors from his Web pages at http://www.Lease-Option-Sub2.com

More than 40 states signed onto a proposed $25-billion deal with major mortgage servicers over faulty foreclosure practices. New York, Nevada and Delaware joined California in holding out for better terms.

More than 40 states signed onto a proposed $25-billion settlement with major mortgage servicers over faulty foreclosure procedures, but California, New York and other key states were still not among them.

California has until Monday to share in a multi-state deal with banks to obtain mortgage relief and reforms. Atty. Gen. Kamala Harris, who walked away from talks last year, says the door remains open.

With a Monday deadline at hand, California officials have resumed direct talks with the Obama administration about joining a multibillion-dollar, multi-state mortgage settlement with the nation's largest banks, a source said Sunday.

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In one of the more talked-about transactions in town, actors Brad Pitt and Angelina Jolie have sold their Malibu beach house to daytime host and comedian Ellen De Generes for $12 million.

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A decorative cast stone entrance opens to this restored Spanish Colonial Revival-style house in Pasadena's South Orange Grove area. Built in 1920 for industrialist James Wigmore, the house retains such original details as coffered wood ceilings and arched doorways.

They don't believe they can sell their property for what it's worth, so they're spending money on making their homes more comfortable.

Do you fit any of these descriptions?

A biennial research report by the National Assn. of Realtors indicates that a handful of real estate agents and brokers and their clients either don't know the law or don't care to follow it.

When it comes to lawsuits, real estate agents and brokers tangle mostly among themselves.

The president aims to help about 3.5 million people with good credit who are unable to refinance at historically low rates because their homes are worth less than their mortgages.

 

The White House hopes to help millions of homeowners lower their monthly mortgage bill with a $5 billion to $10 billion plan to set up a streamlined refinancing program for people who are current on their payments.

The Standard & Poor's/Case-Shiller index of 20 large U.S. cities fell 1.3% in November from October as foreclosures continue to drag down the housing market.

Three straight months of home-price declines in the biggest U.S. cities showed that foreclosures remain a significant drag on a housing market that is entering its fifth year of deterioration.

L.A. Clipper Chris Paul may be quick down the court, but he moves pretty fast when it comes to buying multimillion-dollar real estate too.