Real Estate Round-Up: O is for occupancy

This year, I have been going through the alphabet, writing an article each week that correlates to a letter of the alphabet. Beginning with the letter A, arriving this week to the letter O. Some letters required more than one week to cover the topic.

For example, the last two weeks I wrote on the letter N for negotiating. The first week addressed various negotiating techniques focused on buyers. The second week focused on negotiating for the benefit of sellers. This week I move on to O, for occupancy.

In a real estate transaction, occupancy is the day and time that the new owner gets to move-in to their new home. It is simultaneously the day and time that the seller needs to be fully vacated. This time period is memorialized in the contract, so there is a complete understanding of when that change of possession takes place.

Occupancy is another one of those subtle negotiations that can be used to strengthen a buyer’s offer in a competitive market like we are currently experiencing.

A very minor change like offering the seller three days to vacate after the close of escrow, enhances a smooth transition, that alleviates the stress of a seller packing up their moving van, when they are still waiting to hear the anticipated words, “it’s recorded.” Without the three days to vacate, the seller must be out on the day that the recording occurs. That means the seller must have their movers lined up with a deadline for driving off on that exact date.

Providing a seller with three days after the close of escrow is a great way to build-in a small buffer, should a delay occur.

A seller with the three additional days for occupancy, can arrange for the movers to come on the second day after the planned recording date and still have time to clean the property up on the third day. The confidence of packing up a moving van, knowing that you have officially “sold” your home, is priceless.

Unfortunately, there are things that can occur in a transaction that can cause a delay, and if the seller doesn’t have the additional time to vacate, they could be moving out, while they are still the recorded owners of the home, simply

because that is the scheduled moving date with their moving company.

Imagine if the lender funds later in the day, so the recording gets bumped out to the next day. If that delay simply moves the recording from Wednesday to Thursday, then the three days is more than enough time to help alleviate the stress.

But suppose that late funding occurs on a Friday, then recording becomes Monday. If the contract calls for the seller to be out on the same day that SD County records the transfer, then the seller needs to have the moving van loaded and ready to go, and now, with the funding delay, they will be out of their home three days prior to recording. If they had the three days, they could have arranged for their movers to pack things up on Monday, so the unexpected delay wouldn’t be good news, but it would be a lot more tolerable knowing that the sellers are still occupying their home.

We’ve had situations when three days is not enough time. We’ve had elderly sellers who want to know that their proceeds are in their bank account before they vacate. We’ve had sellers who are moving out of their family home of over 30 years who need additional time to part with many of their family mementos and all their memories, before they are ready to vacate.

We’ve had trustees selling family homes that need to have estate sales, which can require more time to accommodate. We’ve had families that are purchasing a home in another state, and their proceeds need to get to that purchase escrow, so being able to remain in their former home until that occurs is a stress reducing situation.

Over the years we have consistently negotiated three days after the close of escrow for the day and time of occupancy for the sellers we represent. But many times, we have negotiated much longer time periods for the sellers we represent.

One time we negotiated two months for the seller at the grand cost of $1. More times than I can count, we have negotiated 14 to 29 days for the seller at no or very minimal cost. This small strategy works well in all markets to set your offer apart from the others. In this market, it can substantially set a buyer’s offer apart from other less creative offers.

Real estate is a business of many, seemingly small, individual negotiations that can add up to significant value to both buyers and sellers. O is for occupancy, but O comes after N, which is for what? That’s right, N is for negotiation. Thanks for reading.

Kim Murphy can be reached at [email protected] or 760-415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.