Would you like to move up to a larger home but you’re afraid of having to move twice?
Something that may help your situation is called a leaseback. A leaseback allows you to stay in your home for a period of time after closing, making your move to a new home easier.
We have become very experienced in helping our clients negotiate leasebacks. Currently we have 4 seller clients who we helped negotiate a lease back for as part of their sale.
Here’s how a leaseback works…
Along with the standard contract there is a 2 page addendum that allows for the seller to remain in the home after closing as a tenant. The buyer becomes the landlord.
This is a very simple form that spells out how long the seller can remain in the home along with a rental amount and any deposit.
Most leasebacks are for 60 days or less because an owner occupied loan will require the buyer to move into the home within that time.
The seller typically pays a per day amount of rent that will equal the buyer’s mortgage payment although the leaseback can be for any amount, even free. This rent is paid at closing.
The buyer/landlord can also collect a deposit. Normally the seller/tenant pays for utilities while they are in the home.
Why would a buyer agree to a leaseback?
A leaseback may be a good option for a buyer you can’t occupy the home immediately. Perhaps you aren’t moving to the area for a couple months. Or perhaps you have a lease you can’t break and a leaseback provides some compensation rather than paying for both rent and your new mortgage payment.
Because we are in a seller’s market sometimes the only way a buyer can get an offer accepted is by agreeing to do a leaseback. A seller may require any offer to include a leaseback through a specific date.
From the seller’s standpoint there isn’t much downside.
A buyer risks the home being damaged during the leaseback. Something any buyer should do is tell your insurance company you will have a tenant in your home after closing to be sure your insurance policy covers you.
If you have any questions about how a leaseback works as either a buyer or a seller call/text 512-791-7473 or send an email to eric@koparealestate.com.
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Posted by Eric Peterson on
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