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When Should You Stop Utilities When Selling a House?

At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

Curious about when to stop utilities when selling a house, one of the final items on your closing to-do list? Top-selling Charlotte, North Carolina, real estate agent Leigh Brown routinely offers clients an easy rule to follow: “My advice to sellers is always to have your utilities on until the next business day after closing. I had a closing on a Friday at 4:30 p.m. Well, at 4:30 p.m. the house isn’t going to record, which means the house is still in the seller’s name over the weekend.”

So, in that case, a Monday utility exchange would ensure that the house is functional throughout every hour during which you still own it. You should put in a call about the upcoming transfer to each of the relevant utility companies — which may include electricity, gas, water, and trash — at least three weeks in advance.

Now, no one’s suggesting you pay for the new owners to take long showers, chill down the house to 66 degrees, or hydrate the lawn for months on end. But here’s why Brown and other real estate experts advise keeping the lights on and the water running throughout the home sale process, not just as a courtesy to the buyer — but also as a necessary protection for you as the seller.

Inspections and walkthroughs require working utilities

Without working utilities, certain key steps to close like the home inspection and final walkthrough can’t be adequately performed. A home inspector will need to run the faucets, flush the toilets, start the dishwasher, and flip on the light switches as part of their standard checklist. While Fannie Mae doesn’t require utilities for the property to be on at the time of the home appraisal, it can’t hurt to make sure that the appraiser is able to see the property in its fully functioning state and have the ability to turn on lights if necessary, if only to help in their accurate evaluation of the home.

In addition, most real estate contracts allow buyers the right to confirm the property’s condition before closing in the form of a final walkthrough. In Brown’s state of North Carolina, the standard contract stipulates that the seller will provide “reasonable access” to the home, including working utilities, through closing or up until the buyer takes possession. Not all real estate contracts include this specific utility clause, but check with your real estate agent to confirm any requirements in your state as well as any relevant clauses that may have been penciled into the contract during negotiations.

Even if you aren’t required to keep the utilities on, a home without electricity or water will be dark, desolate, and cold or hot depending on the season — hardly welcoming or comfortable for your buyers. You don’t want to give them pause to rethink their decision or make them less excited about this purchase in any way, a sentiment which could reduce your leverage in negotiations.

Closing dates can (and do) change

No real estate deal is immune to roadblocks; in fact, 17% of recent real estate settlements were delayed, with buyer financing and issues arising from the inspection or appraisal being the most frequently cited problems. Knowing that your closing date could be a moving target, your utility transfer plans should remain flexible until the title clears and you’ve received the proceeds from the sale. If your closing date needs to be extended, call your utility companies right away and reschedule so that they’re in the loop. Otherwise, you could face late fees or find the water won’t turn on because no one is paying the utility bill during this gap period.

Heat, air, and running water help protect vacant homes

Perhaps you’ve sold this house from out of state or had to quickly relocate for a job transfer before the sale closes. Whatever the case, you’re still responsible for any damage that happens to the under-contract home until closing — so don’t count your chickens before they hatch. Keep your utilities running from afar so you can control the temperature and ideally set up some lamps that can turn on via self-timer in the evenings to discourage a break-in.

To avoid a burst pipe in freezing weather, you need to maintain a house temperature no lower than 55 degrees. Southern states aren’t exempt from risk, either. According to a report from Risk & Insurance, all 50 states have seen freezing temperatures at some point within the last decade. The average loss caused by a burst pipe is $27,000, according to the same analysis, with the highest claim reaching a cool $1.7 million. Indeed, a burst pipe causes water damage to floors and carpeting at best, and requires an entire rebuild at worst.

On the flip side, a house temperature exceeding 85 degrees can cause damage as well such as peeling wallpaper, chipped paint, and elevated humidity levels that increase the risk of mold in the property. In addition, a home without working utilities may be more expensive and difficult to insure. If you fail to notify your insurance company that you’re leaving the property for weeks at a time, they could deny your claim during the time it was left empty.

Utility liens can block your sale

Let’s say there’s a mixup. You’ve been out of the home you’re selling for several months, and your utility bills went unpaid. The utility charges to the property go unpaid as a result, causing the energy or water company to place a lien against your home. You go to close the sale, and it’s blocked by a cloud on the title that you discover to be one or more unpaid utility bills, attached by the local government who manages the city’s utilities. Now, at this point you could likely hold back a set of funds to cover the utility lien with the sale proceeds. Such a situation can be avoided by covering the utilities for the property all the way through closing, making sure to pay off any outstanding bills well beforehand, and communicating closely with the buyer about the utility transition.

Transfer is easier than an actual shut-off

Ideally, your utilities are never shut off — as can happen when you don’t pay the bill — the accounts are rather transferred to the new owner. Once you turn off your utilities, turning them back can take 24-48 hours minimum for some companies. A technician may need to come to your home to physically get things back up and running. You’ll likely also pay a reconnection fee to account for the technician’s time and work. These fees vary by company and municipality, so you’ll need to check with your utility provider to get an exact number.

However, even if the buyer says they’ve requested service for the day after closing, it’s best practice for you as the seller to also call your utility companies and put in a “Stop Service” request for the date that you want your service at that address to end. With most companies, you can do this online. Finally, Brown recommends that sellers also add in additional time if they’re dealing with a municipality to schedule their utilities transfer, as city departments can take longer to get you on the schedule than private companies.

Reduce stress with a smooth utilities transition

A home sale is a stressful period for all involved, and despite being a small detail, utility transfer can raise tension and problems right when you’re about to make your exit as a seller. Rather than cut it close and try to save a few bucks with an early utilities cut-off, hedge on the side of giving yourself and the buyer a little breathing room to navigate the transition. The buyers will appreciate it, and you won’t create any additional risk of something bad happening to the home in the 11th hour. When in doubt, keep the home well-lit, functioning at a comfortable temperature, and connected to the water lines until you’re 100% confident the deal is done.

Header Image Source: (Kelly Sikkema / Unsplash)