Selling an Occupied Property that is Expected Vacant Upon Closing
You have a property to sell and you represent the administrator of the estate. Some of the beneficiaries occupy the property. The occupants have informed you that they will vacate the property just before the close of escrow, but there is no guarantee they will. There is no court order stating that they will.
What to do?
As the listing agent it is your duty to act in the best interest of the seller, and generate the highest possible offer for the estate.
The standard purchase contract indicates the property will be delivered vacant to the buyer. In this case, there is no guarantee that the occupant will vacate the property prior to the close of escrow and leaving the contract as it is, places the seller at risk of being in breach.
Another option some agents may propose is to specify that the property may be delivered occupied, which will make owner-occupant buyers lose interest in the property, as it poses additional risk and cost. The property would most likely be sold to an investor at a substantially lower price.
The strategy that should be used in this scenario is to add a provision to the purchase contract stating that if the occupant does not vacate the property within a specific date, the buyer has the right to cancel the transaction and have their deposit returned.
This provision accomplishes three important goals, it:
- Protects the seller from being in breach of contract.
- Provides the buyer with a level of comfort that should the occupants become non-cooperative and refuse to vacate, the buyer can cancel the transaction and retain the deposit.
- Motivates the occupants, who are beneficiaries of the estate, to vacate the property by the date specified. If they don’t vacate, there’s no sale, and they won’t receive their distributions.
Attracting owner-occupant buyers results in generating the highest possible offer for the estate, and that should be the ultimate goal. Owner-occupant buyers obtain financing most of the time and are willing to pay substantially more than what an investor would pay, thus providing a far greater return for the estate.