A rent-back agreement is a legally binding agreement between yourself and the people who are buying your home. It puts into terms the conditions to which you both have settled upon, for example, how long you will be staying after closing, and how much you will be paying in rent.
You can imagine an agreement like this takes some great timing on both parties. It is a great arrangement for a seller that has not found a place to live yet. To pay rent would be better than moving twice, couch surfing at close friends or family or paying to stay in a hotel during the limbo period. It also helps out the buyer as the rent that the seller will pay could help the buyer recoup large closing costs, also an offer that is flexible in allowing a rent-back agreement may just seal the deal!
As always there are a few things to consider when entering into a rent-back agreement.
For the seller: having this buffer time in your own home is a lifesaver! However know in advance that buyers typically won’t give you any more time than 60 days to move out. Something else to keep in mind is that the property is no longer yours. You technically have a landlord now and any damages may result in you not getting your security deposit back.
For the buyer: if you are in no rush to move, offering a rent-back agreement could be the key to you sealing the deal for your new home! It also means that you are a landlord now with tenants. You are in charge of repairs for the home.
For both: the rent-back agreement is a legally binding contract between buyer and seller. Both parties must uphold the agreement. Sellers must move out when it is time to do so. If something needs repair while the tenants are there, the buyer must pay for it. However if the tenant is causing damage, the seller must pay for it. Both parties need to decide how long the sellers are allowed to live there, and how much they will be paying in rent. Your Shorewest, REALTOR® can help you decide on the appropriate amount. The buyer should also charge a refundable deposit, just like any landlord would.
A rent-back agreement can be a great solution for a seller that has sold their home but has not found their new dream home. This scenario is not viable for everyone and takes a special agreement, but if it works, it is a great arrangement for buyer and seller! Talk to your Shorewest, REALTOR® today if this is something you would like to look into! #ShorewestRealtors #SellersMarket #RentBackAgreement