Planning to sell your home while purchasing another on the same day? It’s a common scenario in Alberta’s bustling real estate market. However, it’s crucial for both home sellers and buyers to understand the potential issues that can arise during same-day closings. In this blog post, we’ll explore the challenges and provide guidance on how to navigate them successfully.
Anticipating Possible Delays:
When it comes to same-day buy/sell closings, it’s wise to prepare for the possibility of delays. Real estate transactions involve various parties, and sometimes, issues beyond your control may arise. One common concern is financing delays on the part of the party buying your home. They may not have the funds available on time from their lender to close, which will then result in a delay in receiving the necessary funds to complete the purchase of your new home as scheduled.
Bridge Financing and Early Possession:
You should consider options like bridge financing and requesting an earlier possession date on your purchase. These measures can provide some flexibility in case your sale or purchase experiences unexpected delays. However, please note that not all clients may qualify for bridge loans, so you may have no choice but to close on the same day and hope for the best.
The Consequences of Delay:
In the unfortunate event that your sale is delayed, you may face consequences as a buyer. The funds you need for your purchase won’t be available as scheduled, which means you won’t be able to take possession of the property on the agreed-upon date. If the seller agrees to accept late payment of the purchase price, you will also be subject to a daily penalty, as specified in your real estate contract for late closings.
Daily Penalty for Late Closings:
When a closing is delayed, the real estate contract often includes provisions outlining the penalties for late possession. This penalty is usually the current ATB Financial Prime Rate plus 3% per diem on the amount due on closing. This can add up quickly, making it a costly situation to be in.
Preparing for the Unexpected:
It’s essential to be prepared for the possibility of not gaining possession as scheduled.
Conclusion:
Same-day buy/sell closings are a common practice in Alberta’s real estate market. While these transactions can be successful and close on time, it’s essential to be aware of the potential challenges that may occur and to plan accordingly.
Home sellers and buyers should explore options like bridge financing with possession of the new home scheduled before the sale, or possession of the new home scheduled 2-3 days after the sale of the home and a contingency plan in the event possession is delayed.
Being prepared for the unexpected will help you navigate same-day closings with confidence, ensuring a smoother transition to your new home. Remember, in the dynamic world of real estate, proactive planning is key to a successful outcome.
