Why “Sale Pending” Signs Are a Bad Idea

It is the second best feeling a home owner can experience: accepting an offer for their home and opening up escrow. The best feeling, of course, is the day the home actually sells. It has become a custom to publicly acknowledge this milestone—opening escrow—by placing a “Sale Pending” or “In Escrow” sign on top of the For Sale sign in the home owner’s front yard. But is that really a good idea? As things turn out, no.

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The problem is that until a home actually sells, it may not. It is entirely possible for a home to “fall out” of escrow. It happens all the time—even on the last day, just before the escrow closes.

Suppose the person offering to buy your home is killed in a car crash the last day of escrow and the bank lending the money finds out about it. I am pretty sure your home is going to fall out of escrow and you will start the home selling process all over again. What insurance can you get against something like this happening? None, but there is something you can do just in case it does happen. What you can do is to continue to collect the names and numbers of buyers interested in your home. In that way, should your home fall out of escrow, for whatever reason, you will have a list of names to call immediately and quickly restart the home selling process. The problems is that “Sale Pending” signs scare away the next round of buyers.

If a buyer drives by a For Sale sign and they like the home, the chances are they are going to call the number on the sign. When you or your agent answers the phone, you can tell the prospective buyer that the home is in escrow, but you will take their name and number in case anything changes. On the other hand, if that same buyer sees a “Sale Pending” sign on top of the For Sale sign, there is a pretty good chance they will just keep driving, and there goes your backup plan. Why would you do something that offers no benefit and may be a detriment?

When you are selling your home and it finally goes into escrow, resist the urge to do what every other home sellers does and forget about the Sale Pending sign. There will be plenty of opportunity to celebrate once your home is no longer yours. The only sign you should care about is the buyer’s signature on the contract.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

What do You Mean You Can’t Tell Me When My Closing Day is?

The day your home officially sells is called the “closing day.” The closing refers to the close of escrow. It is the day you get the money from the sale of your home (ideally via wire transfer so you do not have to wait for the check to clear). It is the day the buyer gets the keys to your former home. But most importantly, it is the day you have to be out of your home (usually by 5:00 pm). In other words, closing day is a really important day. And because it is a such an important day, you might think that somebody would be able to tell you, with some degree of specificity, what the actual closing day is well in advance of said day. But you would be wrong.

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The way the real estate circus works, closing day depends on a lot of factors out of the control of any one responsible party or individual. Consequently, nobody can guarantee you anything when it comes to closing day, especially the date. The challenge, of course, is that most home sellers (and buyers) want to plan their move around the closing date.

When you hire a mover, they want some advanced notice of the move date. And the farther the move, the more notice they tend to want. We are talking weeks, not days. But since you have no idea of your closing date, this puts you reluctantly into the role of fortune teller. But trying to predict the closing date is a very real predicament.

You might think the “safe” approach would be to pick a moving day well in advance of any reasonable closing day, to make certain you are out of your home by then. There is only one problem with this approach: what happens if the home falls out of escrow (which happens all the time)? Now you have moved all of your furniture out of your home, BUT you still live there, you still own it AND you still have to sell it.

The bottom line is you cannot wait to plan your move day until you know your closing day, but you also do not want to move out too soon either. What to do? There are two possibilities.

First, when negotiating with the buyer you can try specifying an escrow period. Most home sellers specify a not-to-exceed escrow date by stating something like “escrow period to be forty (40) days or sooner.” Rather than that, try stating something like “escrow period to be between thirty five (35) and forty (40) days.” The buyer may object, but it does not hurt to ask. If they do agree, you can just arrange for the movers on day 35. And the good news is, with most movers, you can re-schedule (or cancel) with as little as 7 days notice.

The other approach is to just ignore the closing day, pick a (reasonable) move date and book the mover for that day. This approach works best if you first reach out to the buyer and see if they would be okay with that date. Keep in mind, the buyer, just like you, has no idea when they get to move into their new home.

If you pick the move date before knowing the closing day, two things can happen. Either the closing day will be a few days after your move date, in which case everything works out perfect. If, on the other hand, the closing day is before your move date, you just “rent’ back your home from the buyer for those few days. And, this approach does not cost you anything extra if you do not own the home you are selling free and clear. Because whether you pay your mortgage or the buyer’s mortgage, you have to pay to live in your home until you move out.

Selling a home and moving can be a stressful time, but you can lower the stress by taking control. Do not let the unpredictability of the situation throw you into chaos. You take control by dictating the situation and then doing what is necessary to make it happen.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.