- The Washington Times - Friday, March 15, 2002

Buying and selling a house should be like carefully arranged dominoes: Everything is lined up perfectly. You just start the process and watch all the pieces fall into place, one by one.

Sometimes reality interferes, and everything doesn't fall into place perfectly.

In most cases, a seller puts his house on the market, sells it and then goes into the market to buy a replacement home. This usually takes a couple of weeks, then an offer is made and settlements are arranged to coincide with one another. The first home settles, from which the seller-turned-buyer has plenty of cash to settle on the new house. Settlement happens again, followed by moving vans.

Sometimes, these timelines are not so perfect. A buyer may sell a house and settlement stares him in the face before he has found a home of his choice.

Worse still: He's sold his house, has everything packed and his own home of choice can't go to settlement because the folks he bought it from just were told that the house they bought won't settle because the house he bought won't settle because the people he bought it from can't settle because …

You get the picture. What can you do when you're torn between settlements?

Let's take it one deal at a time.

The best scenario for all of the following examples is that the parties involved renegotiate settlement dates so that the domino effect goes off without a hitch. If not, here are some tips on what to do:

Scenario No. 1: You've sold a house and bought a house, but for some reason the settlements don't coincide.

If you've already settled on your old house and you can't settle for a couple weeks or months then you need two things: a place to stay during the interim and storage space for your belongings.

You're really only up against logistics here. Find a friend or family member who can put you up for a while or possibly look for temporary housing if you're moving into a completely new neighborhood. You might even consider asking around worship centers if they have a place where they can let you stay for a few days while you await settlement.

Scenario No. 2: You've sold your house and bought a new one, but the buyers of your home can't settle until after you're scheduled to close on your new home. You won't have the money to get into your new home without the closing.

This one is tough. First, see if you can postpone your second settlement. If that doesn't work, then talk with your loan officer about constructing a bridge loanto get you through thetwo transactions.

A bridge loan, sometimes called a "swing loan," is secured by the borrower's present house. It provides the borrower with enough funds to close on a new house before settling on his existing home. According to the Realty Bluebook, a bridge loan is acceptable, if:

• "The purchaser has the ability to carry the payment on the new home, the payment on the other obligations, the payment on the current home and the payment on the bridge loan; and

• "The bridge loan is not cross-collateralized against the new property."

This last statement means that the bridge loan is not secured by the new house just the home trying to be sold.

Scenario No. 3: No one can settle on time and you find yourself in a gridlock. The reasons behind the houses not going to settlement could determine what happens next. Either the buyer and seller have a friendly, albeit frustrating, release of contract or they exchange harsh words followed by threats of lawsuits. This scenario is rare, but it happens occasionally.

Being torn between two closings can be avoided by secure financing,careful planning and surrounding yourself withable professionals.

M. Anthony Carr has written about real estate for more than 12 years. Reach him by e-mail ([email protected]).

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