Although home prices have cooled in the past months across the country, housing inventory remains low, as supply chain issues continue to cause delays in the completion of new construction homes and economic uncertainty looms large. If you are buying a new property while selling the home you currently live in, it can be helpful to know about rent-back agreements.

Many sellers fear that they might find themselves temporarily “homeless” if they must move out before their new construction home is ready or prior to closing on another property. That could mean having to put one’s belongings into storage and look for a place to stay in the meantime. Instead of having to “move” twice, one option is to enter into a rent-back agreement with the buyer of your home.

As the name implies, a rent-back agreement allows the seller to stay in their home for a certain period of time after the closing date in exchange for rental payments to the buyer. This arrangement, however, is a short-term deal that may last anywhere from a few days up to 60 days. Lenders are unlikely to accept leasebacks that exceed 60 days.

For sellers, the advantages of a rent-back agreement are clear. It allows them more time to find their dream home, keeps them from living in temporary housing, and saves the stress of moving more times than necessary. Buyers, meanwhile, can also reap some benefits. In a competitive market, a rent-back agreement could make an offer more attractive to the seller and help tip the scales in the buyer’s favor. In addition, the extra money from the rent payments can help offset expenses like closing costs and mortgage payments.

If you are considering a rent-back contract, be sure to speak with your attorney about potential risks. Oftentimes, buyers will charge a refundable deposit on the off chance that damages occur while the seller is still living in the property.

Have you been thinking about purchasing a home this season? I would love to discuss your financing options with you! Call me today to set up an appointment.