“Renting Back” After Your Home Is Sold

Sometimes it is very helpful to sell your house before you really want to move. This often happens when you have a new home built but are not sure of the date of completion. Is there a way you can sell your house so that you are sure funds are available for new purchases but stay in your old house until the new construction is complete. Yes, there is a renting back strategy.

The features of this strategy vary from country to country, but in the strong seller market that we experience, buyers will often agree to let the seller stay at home for a period of time as long as the rent is paid. In competitive situations, buyers who are willing to do this will often have a winning bid even though there are other offers as high as possible.

Enter the Lease-Back or Rent-Back Agreement

Agreements that cover situations state the length of time the seller will remain. This can be done with a specific date named or words that allow the seller to keep up to date with the possibility of him moving faster. The amount can be in the form of a fixed amount paid from the result of settlement or monthly amount, or daily amount. Usually, but not always, related to the amount of mortgage payments under the buyer’s new loan. Sometimes there is a deposit of damage, sometimes not. Usually there is a clause that says the seller will consider the buyer harmless to damage to himself or property that occurs after the sale is completed and before the seller moves.

The lawyer who composes your contract offer can make such an agreement. If you use an online form, you should be able to find it for this situation. If you work with a real estate broker, he can handle it for you.

An example

Recently I saw a very pleasant example of this idea in action. An old widow is contracted to have a one-level condo unit built in a new community that provides all exterior maintenance. He underwent hip replacement surgery and wanted to escape the lack of a home where he raised his children. The house is large, has stairs and is located on large land, some of which are forested with many perennials and mature bushes. Both the house and garden are beautiful, but the maintenance is high.

The contract to buy requires a series of deposits and strong indications of the source of funds before the settlement in the new condo. The widow put her house on the market. A young couple with two sons was eager to buy it. The situation is competitive. They bid for the widow. He answered their original offer. He did not raise the price of their offer, which was slightly below the asking price. He did not believe the young couple would qualify for a bigger loan. Instead, he did something rather creative.

The widow replies with a proposal that she “rent back” for a period of “up to” a certain date (the date outside the competition date scheduled in the condo) in return for the down payment that will be paid to the buyer on completion. The total rent back period is less than two months. Fixed costs are less than the amount of new mortgage payments for buyers. However, because they did not pay a new mortgage in the first month, it was not too far from the line. The couple really wanted a house, so they received a reply.

Another victory, a victory situation has been made. The widow only needs to move once and the young couple gets a house they may not have in a direct bidding war. If you find yourself in a situation similar to a widow or young couple, you might find the same solution.

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