People who are selling their home in order to buy another frequently put a "coinciding settlements" clause into their contract offer on the new home. The purpose of this is usually twofold. In this article, we discuss the first purpose which is to use funds from the old home to pay for the new one.
How Coinciding Settlements Work
A coinciding settlement clause usually says something along the lines of "settlement under this contract is contingent upon the settlement of the contract for the sale of the Purchaser's property located at 1234 Spring Valley Drive…" It typically goes on to state the maximum number of days this settlement can be delayed by delays on the other settlement. It also usually says what will happen if the other contract becomes void. (Usually "this" contracts becomes void, too, but that doesn't have to be the case if there's another source of funds.)
The settlements don't literally happen at the same time as the name implies. They can be back-to-back in the same office. They can be a day (or even days) apart in offices in different states. Very often it's necessary for the settlement agent for the first settlement to wire transfer funds directly to the banking account of the settlement agent for the second settlement. This is usually a smooth, seamless procedure.
A Word to the Wise Seller
Coinciding settlements usually work well for the purpose of providing funds as outlined above. The one problem that crops up from time to time occurs when the first sale falls apart for some reason. The most frequent reason the first sale falls apart (when it does) is that the buyer is unable to get his loan. Because of this, some sellers insist that coinciding settlement clauses include language giving them permission to check with the lender for the first buyer. Making sure the first buyer is qualified for the necessary loan is good business. Don't feel awkward about it.
Coinciding settlement is a common fact in the current real estate market. Use the above technique to avoid problems with your real estate transactions.
Raynor James is with FSBOAmerica.org - a FSBO homes for sale by owner site. Visit our "Sell My Home" page to list your FSBO Home or visit our home buying page to see homes for sale.
Coinciding Settlements Clauses – Moving Issues
People who are selling their home in order to buy another frequently put a "coinciding settlements" clause into their contract offer on the new home. One reason for doing this is so they can move from one home to the other at the same time.
Coinciding Moving Day?
One reason people want coinciding settlements is so they can move out of one house and into the other the same day. Sometimes this works out. Sometimes not. If it doesn't work out, don't freak out.
For example, if the house you're buying is a new one, it may not be completed and have an occupancy permit by the date specified. Are you going to risk losing the sale of your old home by insisting that settlement be delayed? Not if you're smart and you really want to make this change. You might explore delaying settlement, or the option of a "lease back" period. If those ideas don't fly, it's time to cope.
Depending on your budget and the length of time between moving out of your old home and moving into your new one, you could:
1) Have the moving company store your furniture and household goods, or
2) Rent a "smart box," pack your household items into it, and leave it parked in front of your old home, or park it in front of your new one (depending on who grants permission), or
3) Store your things in the basement or garage of your new home (with permission), or
4) Rent a storage unit by the month, or
5) Store your things in the basement or garage of a relative or friend, AND
A) Stay in a hotel or motel for a few nights, or
B) Stay in an extended-stay hotel or motel suite, or
C) Stay with family or friends, or
D) Go camping, or
E) Some combination of the above.
The point is to act like a mature adult. Be flexible. You're making a big change. The chances it'll go off without a hitch are slim. Keep things in perspective. Practice creative problem solving. You'll be proud of yourself and have a smile on your face when moving day comes.
Raynor James is with FSBOAmerica.org - a FSBO homes for sale by owner site. Visit our "Sell My Home" page to list your FSBO Home or visit our home buying page to see homes for sale.
Applying for Your First Home Mortgage? What You Need to Know
The following home mortgage tips will help you figure out how to best go about the home mortgage loan process for your situation.
Home Mortgage tip #1 Interest Rates
Before applying for your first home mortgage loan you will want to shop around and see what average home mortgage loan rates are. Shopping for home mortgage rates online is a timesaver and frequently have lower rates as well. Your home mortgage rate will affect how much money you have to pay back over the term of the loan, so the lower the better.
Home Mortgage Tip #2 Fixed or Variable Interest Rate
When it comes to your home mortgage loan there are more options than just a loan you pay back over a set amount of years. You can choose different home mortgage interest rates that work best for your current and future situations. So, before you apply for a home mortgage loan do some research on variable and fixed interest rates to find what will work best for you.
Home Mortgage Tip #3 Down Payment
When applying for a home mortgage loan for the first time you might not be aware of the general down payment you will be required to make. Many times a home mortgage loan requires between 10 and 20% of the price of the home, but if you have good credit sometimes you can make a lower down payment and still get a good deal on your home mortgage. This depends on the home mortgage lender, so shop around.
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