What is a Rent-Back in Real Estate?
Over the last decade, we’ve had the pleasure of working with some amazing people from all walks of life. In every situation, there was a unique set of challenges, with every seller having their own unique needs. The one thing they’ve all had in common, however, is they all needed somewhere to live. We all need somewhere to call home, right? So how do you make sure you’ll still have a roof over your head once you sell your current home? What if your home sells before you’ve found your new dream home? What if you find that dream home before you can sell your current property? Well, to be honest, there’s a pretty simple solution. We’ll set you up with a rent-back program that will allow you to stay in the home for an agreed-upon time after it’s been sold. This way you’ll have more time to look for your dream home, and you won’t have to be homeless.
How it Begins
So how does a rent-back program work? Well first things first, we need to get your home on the market. I know it may be scary, but I promise you’ll have plenty of time. Okay, so now we’re ready to go, and you’re ready to sign on the dotted line. Once we sign the listing contract, we’ll have about a 2-3 week window before we put the home on the market. This gives us time to get the property ready for showings and time to prepare our marketing materials. Now after we go live on the market, your home will receive an offer within a few weeks, depending on your area and price point. This is when you can start putting in offers for any new properties that you may have found. If you still haven’t found anything you like, well that’s okay. You’ve still got time. Once you’ve accepted an offer, you’ll still have 4-6 weeks until the transaction closes and you need to be out of the home. So to recap, from the moment we sign a sales agreement to the moment we close on the sale, you’ve had anywhere from 2-3 months to search the market. In my experience, this is plenty of time to find your new home.
It's a Wash
But, let’s just pretend for a moment that even after 3 months of searching, you still haven’t found your new home. Well now you need a rent-back. We’ll help you negotiate a period of time, typically around two months, maybe three, where you’ll rent the home back from the new owners. Under the terms of this rent-back, you’ll pay 1/30th of the new owner’s P.I.T.I. (Principal interest taxes and insurance) or simply put, one day’s worth of their mortgage on the home. So if you stay in the home for 30 days, you’ve just paid one month of the new owners mortgage. This ensures that they don’t lose any money, nor do they make any money off of you. It’s essentially a wash, and just allows you to have some peace of mind. So, if you end up taking a full 90 day rent-back, it can end up costing you a lot of money.
Typically what ends up happening is, you’ll receive an offer on your home and that money will start to burn a hole in your pocket. Now all of a sudden, more homes on the market start to look appealing and you fall in love with more than one property. Luckily for you, you’ve hired an expert broker from Matin Real Estate and we’ll make sure that you’re staying focused and not getting into a home that doesn’t really meet your needs. In the end, we just want to make sure you have the best possible buying and selling experience and that you make the best possible decision for yourself and your family.
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