Sometimes it’s helpful to sell your home before you really want to move. This often happens when you are having a new home built, but aren’t sure of the completion date. Is there any way you can sell your home so you’re sure of the funds available for the new purchase, but continue to live in your old home until construction of the new one is complete. Yes, there is - with the renting back strategy.
Enter the Lease-Back or Rent-Back Agreement
The particulars of this strategy vary from state to state, but in the strong seller’s market we’re experiencing, buyers will often agree to let the seller stay in the home for a period of time as long as rent is paid. In a competitive situation, the buyer willing to do this will often have the winning bid even though there is another offer as high as his or higher.
The agreement covering the situation states the length of time the seller will remain. It can be done with a specific date named or wording that allows the seller to remain up to a specific date with the possibility of her moving sooner. The amount can be a fixed figure paid out of the proceeds of settlement or a monthly amount, or a daily amount. It is usually, but not always, tied to the amount of the mortgage payment under the buyer’s new loan. Sometimes there is a deposit against damage, sometimes not. There is usually a clause saying the seller will hold the buyer harmless for any damage to himself or his property which occurs after the sale is consummated and before the seller moves.
An attorney can create such an agreement. If you’re working with a real estate broker, he or she can handle it for you.
An Example
An elderly widow contracted to have a one level condo unit built in a new community which provides all exterior maintenance. Her contract to purchase required a series of deposits and a firm indication as to her source of funds well before settlement on her new condo. The widow puts her home on the market. A young couple with two sons was very anxious to buy it. The situation was competitive. The widow countered their original offer. She did not raise their offer price, which was slightly below her asking price. Instead, the widow countered with a proposal that she’d rent back for a period of up to a a date beyond her scheduled competition date on the condo in exchange for a modest flat sum to be paid to the buyer at settlement. The total rent back period was less than two months. The flat fee was less than the amount of the new mortgage payment for the buyers. The couple really wanted the home, so they accepted the counter offer.
Another win, win situation was created. The widow only had to move one time and the young couple got a house they probably wouldn’t have in a straight bidding war. If you find yourself in a situation similar to either the widow or the young couple, perhaps you can work out a similar solution. The professionals at Crown Realty Experts will be happy to help you rent back your home after is has sold.
