You spent all morning making progress on your move, taping up boxes and bubble-wrapping your grandmother’s fine china. But just as you’re about to take a lunch break, a moving truck pulls into your driveway.
To your horror, the buyers step out of the truck. And your own movers haven’t even arrived yet. Clearly, there’s been some confusion around the occupancy date.
In a home sale, the occupancy date is when a buyer has the legal right to move into their newly purchased home. According to the Federal Trade Commission (FTC), closing, or settlement, occurs when ownership transfers from the seller to the buyer.
While both occupancy and closing could happen on the same day, the two don’t always coincide. And that’s where confusion can set in, causing frustration for both buyers and sellers.
We asked top Washington real estate agent Greg Barkley, who sells homes 19% quicker than the average Spokane agent, about how mix-ups around occupancy dates affect sellers. Barkley shares his advice about how sellers can avoid occupancy date confusion and what they can do to avoid extra stress on moving day.
1. Negotiate a buyer occupancy date that works for you
According to Barkley, setting the occupancy date is “just part of the negotiation” process. For instance, the seller may negotiate for an occupancy date weeks after closing if they know in advance that they’ll need extra time to move out. Other times, something could happen in the middle of the deal (such as a lender delay) that requires the seller and buyer to renegotiate the closing and occupancy dates.
Before you agree to an occupancy date, keep these tips in mind:
2. Understand the closing timeline — and when you have to move out
When do you have to move out? It depends on your agreement with the buyer. The purchase agreement specifies both the closing date and the date the buyers will be able to move in.
It can take 49 days on average to close a purchase loan, according to an April 2021 report issued by ICE Mortgage Technology™. In this case, an occupancy date that falls on the same date as closing will give you approximately 49 days to pack up your things. Your timeline may differ, depending on your local market and the terms you negotiate with the buyer.
For example, cash buyers don’t need to wade through a loan process, which can speed up the closing timeline. Cash transactions can close as quickly as one to two weeks. If you’re confronted with an accelerated closing, consider negotiating an occupancy date that falls after your closing date. Doing so will give you more time to move.
There are also cases when the buyer requests early occupancy or a move-in date before the title transfers. If you agree to early occupancy, you’ll have fewer days to clear out of the home.
3. Negotiate for a lease-back if you need more time to clear out
To give yourself extra time to move after your home sale closes, you could negotiate a seller lease-back. The agreement would allow you to stay in your home for a set period after ownership transfers. Negotiating a seller lease-back can help you avoid moving twice — first to temporary lodgings, then your new home.
4. Clarify whether the buyer’s lender has occupancy date requirements
If you’re hoping to negotiate a seller lease-back, you’ll need to keep the buyer’s lending requirements in mind. Some lenders require the buyer to occupy their new home within a certain time frame after closing. Fannie Mae, for example, requires the buyer to move in within 60 days. In such cases, the buyer wouldn’t be able to accommodate your request to remain in the home beyond then.
5. Specify an occupancy time in addition to the date
Even if the buyer and seller are on the same page about the day the buyer will occupy, confusion can occur if the parties don’t specify an effective occupancy time in the purchase agreement. Does the buyer have the right to move in at 10 a.m., or is it 10 p.m.? If you fail to set a time, your buyers might show up with a moving truck before you’ve cleared out.
And to make matters worse, the buyers may accuse you of breaching the terms of the purchase agreement. If the buyer doesn’t agree to an extension of time, they could take legal action and sue for damages. If closing hasn’t occurred, the buyer could also terminate the purchase contract due to a contract breach.
Barkley shares that while Washington state’s standard purchase agreement sets the move-out deadline at 9 p.m., he’s witnessed buyers overlook occupancy time. “Buyers may assume that they get to move in as soon [as the loan] funds and records, which might be 2 o’clock in the afternoon,” he warns. “They’ve either forgotten, or it wasn’t explained to them that the sellers can take until 9 p.m. to [move out].”
Best practice? As you near the buyer’s date of occupancy, remind them (through your real estate agent) that you’ll be out of the house by the time listed in the purchase agreement.
6. Know that market conditions influence occupancy date negotiations
The amount of leverage you’ll have negotiating for your ideal occupancy date largely depends on if you’re in a seller’s market or a buyer’s market. While you’ll have more sway in a seller’s market, negotiating extra move-out time in a buyer’s market might not be so easy. In a buyer’s market, “things work out more in the buyer’s favor, and if the buyer wants to move in sooner, then that’s probably how that negotiation is going to go,” says Barkley. If you can’t agree on a later date, you’ll need to figure out how to expedite your moving plans.
Occupancy date all set? Jump-start your move and avoid procrastination anxiety
Once you and the buyer agree on an occupancy date, you’ll want to put your moving plans into motion. The last thing you want is to underestimate how long it will take you to pack, increasing your moving day anxiety. Plan a seamless move following these tips:
Start packing as soon as you find a buyer — or sooner
Barkley advises his clients to start packing before their home even hits the market. It’s part of the staging process to make the house presentable for buyers.
First, “we get rid of the clutter,” he says, by clearing items off countertops and removing excess furniture. Then, he suggests that sellers box up “stuff they can do without for the next 30 or 40 days.” After that, “it should just be a continuous process.”
You can store packed boxes in the garage and closets — prospective buyers take pre-packing as a positive sign that the seller is ready to close a deal ASAP.
By getting a head start, you won’t be overwhelmed with having to pack everything at once. Hopefully, you’ll avoid any last-minute packing rush as the buyer’s occupancy date nears.
Book your moving company before you set the date in stone
If you’re moving during peak season, such as the summer months, you may want to book your moving company or truck before you lock in the occupancy date. That way you’ll know your moving service of choice is available in time. During peak periods, Movers.com recommends booking your movers two months in advance.
Consider storage units or PODS
Using a moving container like PODS can offer extra flexibility during your move. You can pack ahead of time and store your excess belongings offsite while preparing your home for staging and buyer tours. Also, you’ll have a place to put your things if your next home isn’t ready for you to occupy yet, and you end up in temporary housing between homes.
Re-confirm the occupancy date with your agent (and all parties) as closing nears
Confirm even minor details in advance to ensure everyone — you, the buyer, the agents involved, and the settlement agent — are all on the same page. Communicate when you, as the seller, will be out of the home and when the buyer will move in.
For Barkley, preventing confusion about the occupancy date “really is just about the communication and checking [on] even the most obvious things. Do you know you need to be out today? It never hurts to ask.”
Tidy up before you hand over the keys
Your furniture is safely in the moving truck, your boxes neatly stacked alongside. But moving your items out isn’t quite the final step. Some purchase agreements specify what condition the home should be in on the date of occupancy.
“Our contract says [the seller] will leave the house ‘clean.’ So that’s a very nebulous term,” Barkley says. “One person’s clean is another person’s disaster.” Barkley says some contracts stipulate a professional cleaning once the seller moves out.
But if professional cleaning isn’t required, Barkley says to factor in “several hours to clean. Wipe down counters and floors, clean out drawers, and that kind of thing.”
Header Image Source: (Debby Hudson / Unsplash)