Simultaneous closings are one of the most complicated things to pull off for a Realtor, the good news is this is truly one of my specialties and I’m here to try and break it down in a simple and clear way.
Normally, a simultaneous Closing entails a seller selling their current home and taking the proceeds from the sale and putting those toward the purchase of a new home. If anything in the simultaneous closing process is delayed, it can creates a domino effect for every single buyer and seller that’s affected.
I am selling 123 Main Street for $300K and the sellers are expected to realize $150,000 in proceeds. They want to buy 456 Upgrade Way, but they can’t do it unless they sell their home, so they make their offer on Upgrade Way, contingent on Main Street selling.
The seller of Main Street is relying on the buyer of their current home to close on time, and not have any financing hiccups. The seller on Upgrade Way is relying on their buyer, and their buyer’s buyer.
Is your head spinning yet?
There’s two positions to take depending on which side of the transactions your negotiating but in all cases, it’s important to be confident that the buyer for Main Street is solid as they are the first domino in this equation.
What to look for
I want to make sure the buyer on 123 Main Street has strong financing, a sufficient escrow deposit and that their offer is not contingent on a current home sale. That would just create more dominoes.
Sometimes, a seller will want to find their perfect house prior to putting their current home on the market. This can create a challenge from the seller they want to purchase from. Many times sellers don’t want to take a contract without the assurances that their buyer at least has their home on the market if it’s contingent on a home sale.
Have I done this? Of course your girl has. It’s all about the terms and the timing of those terms that can entice a seller to agree to take a home sale contingency from a buyer.
A paramount question to know the answer to is whether buyers are able to purchase a new home without selling their current one. I always encourage buyers speak with their lender so they know the full range of options at their disposal.
Green Light. Yellow Light. Gre…red…yellow. Green!
Let’s say the stars align, the seller has an offer, their buyer is strong, the contingencies have all come and gone and we’re a week out from closing. Everything is looking good.
The buyer on 123 Main Street needs an extension for their financing. Heart palpitations ensue.
We now need an agreement for an extension by all parties. This is why I always recommend that sellers sign a few days prior to their purchase and store their items either with the moving company or in a POD. This sets proper expectations and allows a buffer for a scenario like this.
At the end of the day, my team and I are experts at simultaneous closings, managing expectations and working with tight time frames and stressful situations, which ultimately result in everyone’s goals accomplished on closing day.
[If selling the primary home is required in order to purchase a new home, it should always be disclosed to all parties and be made part of the contract. I don’t believe it is ethical for any buyer to enter into a contract without disclosing this and holding their hat on their financing contingency in the contract. There are agents who do this, in my opinion it’s not right as it doesn’t keep all parties informed, which is a requirement in the the financing section of the contract.]