Home buyers sweeten deal by letting sellers stay longer

The house next door may have a “sold” sign in the yard, but that doesn’t mean the new owners are moving in. They might have agreed to let your old neighbors might stay for a while.

They may not have anywhere to go. In Williamson County and throughout the Nashville region, it can be difficult to find a house to buy. There are not enough homes on the market to meet demand.

For some homeowners, the solution is to remain in the house they just sold while they find their next home.

“It’s a real situation because of the inventory shortage. In a hot market, where are they going to go?” said Pete Prosser, a Realtor for Zeitlin & Co. Realtors.

He estimates that in up to 10 percent to 20 percent of transactions, the seller stays in the house for a brief time. These arrangements, called temporary occupancy agreements or occupancy after closing, might be for a few days or a few weeks, Prosser said.

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The housing market is tighter than it was at this time last year. There were 1,459 houses and condominiums on the market in Williamson County last month. In October 2015, there were 1,811, according to the Williamson County Association of Realtors (WCAR).

“The biggest challenge facing potential buyers remains the low levels of inventory available. There is no doubt that the strained supply of inventory is leading to the increase in prices, the quicker pace of sales and the increasingly competitive market among active home buyers, WCAR President David Logan said in a release announcing October’s sales results.

Why would anybody sell their home before they have another one to move into? Sometimes they have no choice. In today’s market, many sellers can pick and choose from multiple offers. They often won’t consider an offer from someone who has to sell their existing house first, said Libby Bruno, a Realtor with The Wilson Group.

“Sellers are not willing to accept a contingency. In this seller’s market, somebody may need to have their home under contract before they can go out and find a home,” she said.

On the flip side, why would someone buy a home and let the seller continue to live there? That can be part of a winning strategy when competing with other offers, said Chip Kerr, a broker for Crye-Leike Realtors.

“It is something that typically benefits the seller, but it is also something buyers are using to make their offers more appealing to sellers in the crazy market we are so fortunate to have here in Middle Tennessee,” said Kerr.

Even if they’ve already found their next home, the fast pace of the market can make it necessary for sellers to stay temporarily in the home they just sold.

The timing of the deal might make it necessary for them to close on the house they are selling before they can move into the home they are buying, said Benchmark Realtor Sharon Kipp.

Their choices are to go through the inconvenience of putting their things in storage and moving to temporary housing or staying in the home for a brief period.

Letting them stay can make an offer stand out from all the others, said Karen Baker, who is a broker with Crye-Leike.

“I’ve seen it used in multiple-offer situations as an enticement,” she said.

Temporary occupancy agreements may be popular, but they can lead to complications, said Bruno. She recommends that both sides sign a contract. The Tennessee Association of Realtors can provide a model agreement. Sellers should buy renter’s insurance and buyers should make sure their homeowner’s insurance provides coverage.

“Say the dishwasher goes out, or the HVAC,” she said. Who pays?

“The reason it’s not super advisable,” said Bruno, “is it creates a tenant-landlord arrangement.”