As you proceed with making an offer on a house to buy, you might come across a seller that asks to rent back the property from you in the deal. This is called seller rent-back, and it is something that happens from time to time. If you have never encountered this, here are several things you should know, as the buyer, before you agree to allow seller rent-back.
What is seller rent-back?
Seller rent-back refers to an agreement where a seller of a house would ask the buyer if he or she could stay living in the house after the house closes. In other words, on closing day, the buyer would not take possession of the house. Instead, the seller would stay in the house living there for a period of time. If you are the buyer in the deal, you do not have to agree to this; however, if you do, you can come up with the terms of the deal. The terms to think about include how much rent the seller will pay you for staying there and the length of time you will allow this. For example, you might state that you will agree to this for up to three months but no longer than that.
Why would a seller ask for this?
The main reason a seller would ask you to rent back the house he or she is selling is that the seller needs a place to stay for a short period of time. The seller might be building a house that is not quite finished and may not want to move to an apartment for a few weeks or months in between this time frame. The seller might also be in the process of buying another house but will not close on it until after the closing of this house.
What are the pros and cons of seller rent-back?
As the buyer of the property, there are pros and cons of offering seller rent-back. The main benefit is that you could collect money during this time, and it would really only postpone your move to this new home for a few weeks or months. The downside to it is that you would not get to move into the house you are buying right away. You should carefully think about this decision before agreeing to it so that you fully understand its pros and cons.
If you are in the market to buy a house and are financially prepared for this, you can begin your search by talking to a real estate agent about homes for sale.