Rent Backs: What Are They?
There is no question that the Real Estate market is booming this Spring. Along with a slow, but truly increasing inventory, are the increasing demands of some sellers.
If you took a dartboard and mapped out the reasons why we have not had a decent amount of inventory lately in the Puget Sound region, the fact that sellers have no idea where they would move to after selling would be smack in the middle of the board. I have clients who would love to upgrade, or even downsize, but when they start their search, it all feels very daunting.
Knowing buyers are at their mercy, sellers have been requesting that buyers close in thirty days, and then rent back the house to the seller. Keep in mind that this does not happen with all homes, but we are starting to see it happen more often this Spring. The time frame can be anywhere from one month to six months for the rent back.
What does this mean for buyers? If you agree to rent back, you need to realize that you will become a landlord to the sellers, and yes, there are certain risks. We have forms that can be filed to keep things clean and professional in terms of the Real Estate transaction, and most of the time, things do work out. But what about those risks? If the seller decides to not vacate the property, or if they leave the house in poor condition after turning it over to you at the end of the rent back.
What can you do? Make sure that every detail of the rent back is in writing (including having a good lease agreement). Take a security deposit, and ask that the seller pay your mortgage for rent. We are seeing some buyers allowing sellers to live in the home rent-free, but I would advise against this. Even in this seller's market, it is never a good idea to allow the other side to have control of the steering wheel for the entire time.
Words of advice... Hire an excellent buyer's agent, and proceed with caution.
