If you’re like many people, you know that an offer on a home is about more than just a dollar amount (though the dollar amount is very important). In fact, sometimes the details in an offer can make or break the deal – such as when a buyer is willing to enter a rent-back agreement with the seller.
But what is a rent-back agreement, and should you offer to rent back a seller’s home? This guide explains.
What is a Rent-Back Agreement?
Sometimes a seller is in a pinch. They’re trying to sell their current home but don’t yet have a new one to move to – or they’re waiting to close, don’t have an official work transfer until a certain date, or are facing other circumstances that make it inconvenient for them to move out of the home before closing day.
In cases like that, buyers can offer to rent the home back to the seller for a fixed period of time that ends on a specific date. That’s known as a rent-back agreement, but it’s not as simple as it sounds.
How Does a Rent-Back Agreement Work?
A rent-back agreement is like a very short-term lease. When the agreement starts, the new buyer already owns the home. The seller plans to remain in it until the short-term lease is up.
If you have a rent-back agreement, you and the seller will come to terms with how much rent will change hands, when you can expect the seller to move out, and what will be done by the time the seller moves out. As the owner, you should also charge the seller a security deposit like any landlord would; that helps cover you in the event that the seller accidentally damages the home or leaves items behind.
After you reach an agreement, you’ll close on the house. At that time, you officially take possession of the home – and the seller will give you your security deposit or whatever upfront rent you’ve agreed upon.
Why Do Buyers Offer Rent-Back Agreements?
Sometimes buyers want to enter into rent-back agreements to make their offers stronger. If the seller is in a bind and doesn’t want to move out right away, they may be more willing to accept an offer with a rent-back agreement in it.
What Happens if Something Goes Wrong With a Rent-Back Agreement?
Though it’s rare, it does happen: Sometimes things go wrong with rent-back agreements. If the seller doesn’t leave when they’re supposed to (and they’re unwilling to work with you), you’ll have to go through the normal eviction process – and that’s definitely a headache. Another thing to worry about is damage; if the seller does damage to the home before moving out, you’ll have to charge them for it by withholding money from their security deposit. However, most sellers are simply grateful to have a little bit of breathing room – and most likely, your whole transaction (including the rent-back period) will be seamless and easy.
Are You Buying or Selling a Home in DC Ranch?
Thinking about selling your home in DC Ranch? Call us at 480-360-0281 to find out how we’ll market it to all the right buyers. If you’re also looking for a new home, we’d love show you any listing in the community. Let us know what you’re looking for and we’ll be happy to search for something that’s a perfect match for your needs.
While you’re here, check out our:
- Country Club Village homes for sale
- Desert Camp Village homes for sale
- Desert Parks Village homes for sale
- Silverleaf Village homes for sale