- On June 1, Tamara Holloway went to move into her new Nashville home only to find that the seller hadn't moved out. The seller, Justin McCrory, who listed his home as an FSBO, said he "technically [didn't] have to go anywhere."
- Holloway used an agent, but her story is a cautionary tale about the woes of buying an FSBO home.
- If your client buys an FSBO home, make sure you have the date of possession listed in the contract and get the keys before or on the day of the date listed. Also, do a final walkthrough and set a penalty fee for each day the seller stays in the house after the date of possession.
In an interview with WDTN, the seller, Justin McCrory, said: “The transaction went through, and they’re getting a good clean property. What’s the problem?”
Furthermore, McCrory pointed out that he “technically” didn’t have to go anywhere because he listed the home as an FSBO.
Holloway did use an agent, and the title company that handled the closing said it sent an email with the date of possession to McCrory, but he never responded.
At the time of WDTN’s report, Holloway was in the process of evicting the seller so she could finally move into her new home — a process that could take 30 days or more.
So, how can you protect your client from facing the same unusual situation or another FSBO entanglement? Follow the four steps listed below.
1. Have the date of possession clearly listed in the contract.
Holloway’s title company says it sent the date of possession to McCrory in a email, which he never answered.
It’s unclear if the date was listed in the contract, but members of Lab Coat Agents weighing in on the news said that was Holloway’s agent’s first mistake.
Jennifer Seul Caywood, a Realtor in Tennessee, says there are two specific boxes that specify the date of possession — the date of the deed and purchase price.
“It’s hard to believe neither of those scenarios were chosen as it is a large block of our contract,” says Caywood. “Final walkthrough is also covered in the contract. There has to be more to this story.”
Jarrod Westerlund of California says sometimes they will give a seller two to three days after closing to move out, and Oregon Realtor Holly Hill says sellers have until 5 p.m. to vacate the premises.
Either way, all agents agreed that Holloway’s agent should have made sure the date of possession was clearly written and agreed upon.
2. Get the keys — ASAP.
Holloway’s agent didn’t get the keys from McCrory at closing, which left her at his mercy.
Caywood points out that it’s not uncommon for sellers in Tennessee to still be moving out of a home of the day of closing, and that some buyers won’t receive the keys at closing.
Some seller’s agents will wait until they receive funding confirmation from the title company, but the keys should be handed over as soon as the confirmation is sent.
3. Have a final walkthrough.
It may seem redundant to do another walkthrough at closing, considering the number of walkthroughs you’ve already done, but it’s better to be safe than sorry.
If Holloway and her agent had done a final walkthrough, they might have been alerted to the fact that McCrory had no intention of moving out anytime soon (or ever).
Furthermore, it ensures the home is in the same condition as it was during inspection.
According to Realtor Andrew Brown, Holloway may want to do another walkthrough as McCrory is evicted.
“She’ll get possession, of a gutted and essentially worthless home,” Brown predicts.
4. List a fee charged per day until the home is vacant in the contract.
The last mistake Holloway’s agent made was not listing a fee charged per day until vacant.
Again, the eviction could take more than 30 days to complete, which means Holloway will have to find temporary housing, among other things.
Nevada Realtor Steven Khalilzadegan says he always lists a fee per day until vacant on each contract to protect his client.