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Author: rah1420 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127351  
Subject: Re: Home building contract question Date: 12/18/2002 7:54 AM
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just as long as any sales contract includes the clause that they can't close until closing occurs on the new home.

Just as long as the seller realizes that this could be a sure way to kill the sale of a house. Depending on the housing market, of course -- but in this area, such a contingency will cause the prospective buyer to walk from any deal so structured.

As the seller, we were flexible, and had to be. We broke ground on our new house and put our old house on the market simultaneously. We built a semi-custom center hall colonial and got an estimate of the move-in date from the builder after the sheetrock was up, with a plus or minus one week confidence. He hit it on the nose.

We had already had our closing, since our bank wrote the loan as a mortgage with a stip that it was a construction loan until the bank approved the construction; when the house was done, the builder, the owner (us) and the second owner (the bank) all went through the house and then signed off to remove the stip and it converted over to a mortgage. The great thing about that was that it gave us an extra 6 months of 'seasoning' before we were even in the house, and we were able to retire the PMI 1.5 years after move-in, based solely on appreciation.

Anyway, I digress.

We closed on our old house six weeks before we moved into the new one. In no way were we ever thinking about asking the new buyers to wait six weeks, since THEY were selling a house that they had to leave. We simply found an apartment for six weeks, and moved twice, essentially, putting most of our stuff in storage for a couple months. A pain, but you do what you can to preserve the deal.

It was easy for us, mind you, since we were building in the same town we already owned in. I don't pretend that this will work for everybody, but my point is that you can't depend on contingencies to make the closing easier -- sometimes, they suck. :-{)
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