When you are having a new home built, but aren’t sure of the completion date, there is a 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 using the renting back strategy.
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, 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 a higher offer on the table.
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.
When you’re working with a real estate broker, they can handle it for you.
A win, win transaction created. The seller would only have to move one time and the buyers get a house they probably wouldn’t have in a straight bidding war.
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