A rent-back is when a homebuyer allows a seller to stay in their home after they’ve purchased it. The reason we’ve been seeing more and more of these in this market is that they allow sellers to take the cash from their sale and use it to buy their next home. There are anywhere from five to 20 buyers for every property, and selling your current home first makes you a much stronger buyer.
Rent-backs usually last anywhere up to 60 days. Anything over that and the banks view it as a non-owner occupied property, which means more money down, a higher interest rate, and a completely different loan.
Right now, buyers are offering free rent-backs to sellers. In the past, sellers would have to pay the mortgage principal and interest for the time they stayed in the home after closing. Now, rent-backs are being used by buyers as incentives in this market to get sellers to choose their offer.
“Selling your current home first makes you a stronger buyer.”
There is some risk involved. At this time, rent-backs don’t allow you to evict a tenant or a seller who is in the middle of a rent-back on a property. This situation doesn’t happen often but it does happen.
If you have any questions for us, don’t hesitate to reach out via phone or email. We look forward to hearing from you soon.