Think Now About Your Post-Sale ‘Gap’ Housing Options

Chances are good that when you bought your current home, you closed the deal within 30 days or so. But new mortgage lending rules designed to protect consumers mean the closing process can stretch out two months or longer, with an average hovering around 50 days.

That period between signing a contract and closing is called escrow, and you’ll use that time to firm up your next move. You can negotiate the closing date with the buyer as part of the sales contract. If they are pre-approved by a lender, they should have a pretty good idea of how much time it will take to get the loan funded. The date may move a little one way or the other, but unless there is a problem it should be within a day or two of when you actually close.

Frequently, the keys change hands at closing. Sometimes, you’ll get a small grace period of two or three days before you need to move out. If you have a rental or purchase lined up, good for you! But timing between closing and moving into your next home may still leave you with a gap, so it’s smart to consider your options now.

As for your stuff: If you’ve already rented a storage unit when you staged your home, you can get another or hire a moving company to move and store your things before bringing it to your new home. Start getting quotes while your home is still on the market or as soon as you have a sales contract so you know what you’re going to pay for the storage service.

Now for some temporary options so you don’t have to camp out in the back of a moving truck:

Rent back

It’s possible your buyer doesn’t need to move in immediately. Maybe they are currently renting and have a lease that doesn’t expire until after closing. It’s possible your interests could align. In this case, you may be able to negotiate a rent-back provision. You’ll sell your house, close on the sale and then rent it back for a period of time. It could be days or weeks. You’ll pay at least enough to cover their mortgage and insurance expenses on the home for however long you stay. It saves you an extra moving step and could be beneficial to both parties.

But don’t absolutely count on it. Your buyer may be in the same situation you are in – needing the home ASAP. In other cases, they may not want to accept the risk of becoming landlords, even for a short time. A rent-back is probably the easiest option if it works out for everyone but you need a plan B.

Rent

If you haven’t found a new home, you may need to consider renting a home or apartment until you do. If you’re actively looking to buy, a month-to-month lease probably is your best, albeit most expensive, option. And in a hot rental market they can be hard to find. Start looking as soon as your home sale goes into escrow.

Extended stay hotels

If you’ve found a new home and you’re already in escrow for your purchase but need a place to crash for a couple of weeks, an extended stay hotel marketed toward business travelers could be your temporary home. It’s not as cheap as a regular apartment if you stay very long, but for a stop-gap it works.

Couch surf

If you need a night or two and have close family or friends nearby willing to host you, this certainly is your cheapest option. Of course you’ll want to repay their kindness with a gift certificate or taking them out to dinner, depending on how long you stay. And unless money is very tight, you may want to consider the potential relationship costs if the stay is going to be a week or more.