| 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.
La Joya TX
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.
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.
The attorney who draws up your contract offer can create
such an agreement. If you’re using online forms, you
should be able to find one for this situation. If you’re
working with a real estate broker, he or she can handle
it for you.
An Example
La Joya TX
I’ve recently seen a very pleasant example of this idea
in action. An elderly widow contracted to have a one
level condo unit built in a new community which provides
all exterior maintenance. She had had hip replacement
surgery and wanted to get away from the drawbacks of the
home in which she’d reared her children. The home was
large, had stairs and was located on a large, partially
wooded lot with many mature perennials and shrubs. Both
the home and garden were beautiful, but high
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 put her
home on the market. A young couple with two sons was
very anxious to buy it. The situation was competitive.
They made the widow an offer. She countered their
original offer. She did not raise their offer price,
which was slightly below her asking price. She did not
believe the young couple would qualify for a larger
loan. Instead, she did something rather creative.
The widow countered with a proposal that she “rent back”
for a period of “up to” a certain date (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. However, since they
made no payment on their new mortgage the first month,
it wasn’t too far out of line. 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.
La Joya TX
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