Rent Back to Where You Once Belonged!

By
Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

Rent Back to Where You Once Belonged! 

 

The last several years have witnessed “sellers’ markets” in many areas. For the uninitiated, this means that as a home buyer, it has been of utmost importance to present a strong offer to any seller in the hopes that it may be accepted over others that perhaps have fewer complicating factors. It would seem then that all sellers would benefit from this climate, however, circumstances change when some of those same sellers must immediately turn around and then become buyers themselves. One aspect of a home purchase that can bedevil the “move up” buyer has to do with how one actually coordinates the timing of any move such that one can sell, yet still keep a roof over one’s head without having to move twice. The solution can be as simple as a “rent back,” and it’s something that every seller should understand before listing his home on the market.

 

A rent back essentially does what it says. The owner of any home actually sells the home to a new buyer. The title transfers and the seller receives the proceeds of the sale --- critical because these may be the same down payment funds that will be used to purchase the new house. However, upon close of the sale, the erstwhile owner becomes a tenant to the buyer and the buyer agrees to “rent back” the home to the seller until he or she can relocate and close on the new purchase.

 

 

There are some technical considerations of any rent back. Foremost, the vast majority of investors will not permit a rent back to exceed sixty days. Beyond this, lenders begin to question if the home will be owner occupied at all. Secondly, the terms of any rent back should be stated on the purchase contract or a contract addendum.


Using a rent back can be the key to unlock the door of a less stressful transaction and move. If you would benefit from further insight about this process, get in touch today and I’ll be happy to explain how it may fit your own scenario.

 

Get Back!

 

 

Rob Spinosa
Executive Loan Advisor
NMLS: 22343 CalBRE: 01297944
Cell: 415-367-5959 Fax: 415-366-1590
rspinosa@rpm-mtg.com    www.rpm-mtg.com/rspinosa 
1058 Redwood Highway, Frontage Road, Mill Valley, CA 94941

 

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RPM Mortgage, Inc. – NMLS#9472 – Licensed by the Department of Business Oversight under the Residential Mortgage Lending Act. Equal Housing Opportunity.

 

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Ambassador
2,305,753
Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

I try to discourage those in Colorado.  I always fear the worst and wonder what happens if something breaks after the sale.  

Jan 09, 2016 02:02 AM #6
Rainmaker
597,265
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
SVP of Mortgage Lending, Marin County

You know one thing that's great about Active Rain?  You get to see that common practice in your area is not viewed the same way across the country.  How insightful!  I thought this topic would be routine and boring and yet you find there are strong and valid perspectives to consider additionally.  Truly eye-opening.  Thanks all for the comments!

Jan 09, 2016 02:38 AM #7
Rainmaker
509,230
Michele Connors
The Overton Group, LLC Pitt & Carteret County - Greenville, NC
Your Eastern North Carolina Realtor

This is a scenario I have used with great caution. Also let the atty draw the rent back since our NC contracts stipulate up to 14 days. ( Eviction etc can be a slippery slope ) I guess when parties agree it is a logical systematic way to get from A to B ! 

Jan 09, 2016 02:52 AM #8
Rainmaker
2,920,690
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

Rob, So glad to see this post is Featured! I have a seller in a 30 day rent back situation now. Seller purchased new construction ... and they needed the time. Buyers are happy to rent back when it means their offer is accepted.

Jan 09, 2016 03:15 AM #9
Rainmaker
699,996
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

We do not have rent backs here at all... never done one in all the years I have been here.  Interesting concept!

Jan 09, 2016 03:27 AM #10
Rainer
410,511
Thomas F. Scanlon
Borgida & Company P. C., CPA's - Manchester, CT
CPA, CFP

Rob Spinosa - Well done. Excellent post. Awesome picture. Great song!

 

Cheers,

 

Tom

Jan 09, 2016 03:29 AM #11
Rainmaker
1,184,441
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Renting back certainly helps sellers who would like to move but have nowhere to go immediately. I have clients right now who have a 60 day escrow after contingencies removal. They looking for a rental right now and are stressing out  over only have 2 months to look. Imagine those sellers who only have 30 days. You would love the U.K. market where there is something called a "chain". You could wait a forever to sell your home because everything is contingent upon your buyer selling their home and their buyer selling theirs.

etc.

Jan 09, 2016 05:53 AM #12
Rainer
614,166
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Think outside the box!!!

Using a rent back can be the key to unlock the door of a less stressful transaction and move. If you would benefit from further insight about this process

Jan 09, 2016 08:35 AM #13
Rainmaker
2,433,214
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

Sometimes this will work for a buyer, but many times it will not.  There are liability issues as well.  Sometimes the Sellers don't want to move out when they are suppose to go.

Jan 09, 2016 10:02 AM #14
Rainmaker
4,433,127
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

This is a good option in some cases. I have had sellers rent back from buyers a couple of times over the years.

Jan 09, 2016 08:36 PM #15
Rainmaker
1,068,648
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

It can be challenging coordinating these back to back sale and purchase transactions.  I have pulled off a few rent backs like this but it always seem to have its hiccups along the way. 

Jan 09, 2016 09:25 PM #16
Rainmaker
3,068,216
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Haven Express @ Keller Williams Arizona Realty

Rob Spinosa wrote "The solution can be as simple as a “rent back,” and it’s something that every seller should understand before listing his home on the market."  Not to be confused with "Post Possession".  This is the preferred way to go if need be.  Re-Blog.  

Jan 09, 2016 10:23 PM #17
Rainmaker
2,576,602
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Proving that all things are negotiable...its people who remain the problem

Jan 10, 2016 12:09 AM #18
Rainmaker
3,331,885
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

Sometimes....and sometimes not of course...that rate expires...the lease for the buyers is up...

Jan 10, 2016 04:29 AM #19
Rainmaker
1,649,532
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

Attorneys here are not supportive of rent backs, even when the buyer and seller are. But I do agree that this could be a solution when needed.

Jan 10, 2016 07:53 PM #20
Rainmaker
345,971
Shirley Coomer
Keller Williams Realty Sonoran Living - Phoenix, AZ
Realtor, Keller Williams Realty, Phoenix Az

While rent backs are not the ideal situation, that arrangement can provide a win-win for both buyers and sellers.  Care needs to be taken to provide appropriate documentation for buyer and seller.  Some brokerages here do not allow the agent to get involved in a rent back.  Some do have a Post  Possession document to be used.  I always recommend  a security deposit be retained to ensure the house is in good condition when the "renter" moves out.

Jan 10, 2016 11:26 PM #21
Rainmaker
531,363
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

The seller rent back has become a necessary evil in some cases, especially with the new TRID guidelines where closings can be delayed....we need interim occupancy before closing for the buyers and rent back for the seller...Ours typically are only for a few days up to a couple of weeks though, anything beyond that might be risky!  Thank you for posting and congrats on the feature!

Jan 12, 2016 08:59 AM #22
Ambassador
4,308,314
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Rob Spinosa as long as it is a win-win, rent back is fine. However, I have seen both ways and surprisingly, the expectations change at the end of rent back term - from either parties. Not a big fan of rent back unless everything is written down in detail.

Jan 12, 2016 10:08 AM #23
Rainer
437,007
DEANNA C. SMITH CERTIFIED MOBILE NOTARY
Certified Mobile Notary Signing Agent - Smith Mountain Lake, VA
Highest Ranked Certified Mobile Notary in Virginia

Have you talked to Hugh Hefner Rob Spinosa ?   I hear he is planning on a lifelong Rent back.

Jan 14, 2016 11:44 AM #24
Rainer
85,873
Scott W. Johnson
Marindependent Insurance Services LLC - Mill Valley, CA
Insurance Broker-Agent

Love the pic rob

Jan 29, 2016 12:43 AM #25
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Rainmaker
597,265

Rob Spinosa

SVP of Mortgage Lending, Marin County
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