How to Sell your house before Buying
If you want to sell your home to take advantage of the incredibly Hot Seller’s Market and you are concerned about how long it will take to find your next home to buy you may want to consider using a “Rent-Back” strategy.
What is a rent-back agreement? You’ll definitely want to know if you’re buying a new home while selling the one you’re currently living in. As you might imagine, this double transaction can require some really good luck, timing wise, to get just right. After all, if you sell your home and have to move out before you’ve closed on your new home or even found a place to live, that means you’ll have to either couch surf or pay to stay in hotel limbo. Either way, you’ll have to endure the hell of moving twice.
Not so with a rent-back agreement, which gives the sellers extra time to live in the home after closing, essentially letting them become the new buyer’s temporary tenants. It doesn’t last for long—there are usually time limits—but it will give sellers a chance to close on their new home and pack up for the big move.
For the buyer, offering a rent-back agreement can have a couple of big bonuses. For one, if it’s a competitive market, an offer that’s flexible on move-out dates might very well have an edge. And the rent that the seller would pay the buyer could help recoup those hefty closing costs.
How a rent-back agreement works
Like the name implies, rent-back agreements are legally binding agreements made in writing between the buyer and the seller. Both parties need to decide on a couple of issues, namely how long the seller will need to stay in the house after closing and how much rent the seller will pay to be there. To figure out what rent would be fair, check out comparable homes for rent in your area, then do the math.
To play it safe, the buyer may also charge a refundable deposit, just like any landlord would.
Once everyone agrees, the buyer will close on the house, at which point the buyer will officially take possession and pay any upfront costs like a normal closing. In addition, the seller will pay any security deposits or upfront rent and remain in the house.
If this strategy interests you please feel free to contact me for more information.
Much of these remarks are from a Realtor.com article written by | Dec 11, 2018