We would like to stay in our home after closing (if we ever get an offer)for one week. Is the term I am looking for rent back? It seems to me, it is risky to move before the closing. Is this true?
Everything that is negotiated is in the contract. It gets difficult, however, when a seller or buyer wsnts to change something after negotiations, but not always impossible to amend..as long as both parties agree to amend the contract by addendum.
Whether I'd do it again depends on the circumstances.
It would also depend upon how soon I knew the seller wanted to rent back. Do I know this before I make the offer? Are they telling me that even if they get their closing date -- that no matter what they still want to rent back.
Why CAN"T they move out closing day?...they just don't WANT to?....because it's inconvenient...because they're hedging their bets in case closing falls through after the date is set? Is their new house not ready?
That determines how open I am do them renting back. Also you can always set the rent back price so high they say it's ridiculous and won't do it.
But ALL liabilities have to be spelled out.
Posts: 2192 | Location: Mid-Atlantic | Registered: Jan 31, 2005
Rent back can be risky in it's own way. As a buyer, I want to do a complete walk through minutes before closing. I want to ensure that everything is ok with the house before signing all them papers. Now say, the seller stays past closing. They then decide to take, like in a previous post, all the light fixtures, damage the walls when they accidently drop the couch down the stairs, or otherwise leave the house in a not so good condition. If I was the buyer, I would be asking for a couple of thousand dollars to be put in escrow in case of a situation like this. If they left the house in the same condition it was in at closing, then they get the dough back. But if something needs to be fixed, it comes out of the escrow money. If an escrow is not set up, then it would be up the buyer to take the seller to small claims court.
I don't feel its risky to move before closing. I wouldn't move the second an offer was accepted, but would wait until atleast the commitment letter came from their lender.
We've successfully rented back twice , once for a month, once for 60 days. The buyer knew up front before they even made an offer on the home what the possession date would be in each case. At closing we paid the buyers a check for the "rent" portion and then put a large amount in escrow as a damage deposit of sorts. We had two walk throughs -- one before closing, one at move out where the buyers could either sign off on giving us our damage deposit back or deduct money from this deposit to cover any damage done in the interim.
We also allowed a seller to stay in a home we were buying for a period of 10 days past closing. They were an elderly couple, original owners of the 30 year old home we were buying and the 10 days wasn't an issue for us.
I think it's risky to move out before closing. I've heard too many horror stories about buyers not showing up to closing, or even in today's financial climate, banks yanking financing away even after loan committment.
Do whatever works in your situation, but get it all in writing in your contract and do it up front. You may lose a sale because some buyers won't be open to you staying past closing.
A friend of mine asked for earnest money to be increased when her buyers wanted her out at closing, she wanted to stay 3 days past closing because she had been burned by buyers not showing up to closing. The new buyers balked at increasing their earnest money, so they mutually agreed that my friend would stay in the home for 24 hours past closing.
Rent back can be risky in it's own way. As a buyer, I want to do a complete walk through minutes before closing. I want to ensure that everything is ok with the house before signing all them papers. Now say, the seller stays past closing. They then decide to take, like in a previous post, all the light fixtures, damage the walls when they accidently drop the couch down the stairs, or otherwise leave the house in a not so good condition. If I was the buyer, I would be asking for a couple of thousand dollars to be put in escrow in case of a situation like this. If they left the house in the same condition it was in at closing, then they get the dough back. But if something needs to be fixed, it comes out of the escrow money. If an escrow is not set up, then it would be up the buyer to take the seller to small claims court.
I agree. I, as a buyer, have been burned in the past. I want to do my final walkthru in an empty house with no stuff hiding issues. Thanks for the escrow idea, but it would still be a deal breaker for me.
Posts: 305 | Location: Metro Atlanta | Registered: Sep 17, 2006
I'm not sure if it's just a Texas thing, but both parties have to agree to release escrow. If BOTH parties don't agree, the money reverts to the state. So, it didn't seem like much protection to me. Sure, the seller doesn't get the money, but NEITHER DO WE...
We considered it for the first house we offered on. They were beyond meticulous (there was plastic on the wall in the garage behind the brooms, so the paint wasn't damaged...) and we felt comfortable that they'd leave it in good condition.
For the house we ended up buying, we didn't even consider it. And it turned out to be a good thing. They didn't clean at all. (from the moment we signed the contract, I think) Didn't even *sweep*, much less scrub the bathrooms.
I can see it from both sides, but I'm not putting a stranger's interests before mine when it comes to that much money.
When we sold our home, we opted to do a lease-back for a few weeks. It benefited both parties.
1) It gave us peace of mind knowing that if closing should not proceed smoothly, we didn't have out-of-pocket expenses.
2) The buyer needed additional time to fulfill a current lease.
Everything worked out smoothly and it was all documented. When you get presented with an offer, make sure your Realtor adds an addendum to the contract stating the exact terms. Both parties (buyer & seller) can negotiate a fair rental price and then prorate a daily fee according to the suggested rent. Good luck!
Sorry, I would never consider renting back -- either as a seller or buyer. It's never come up in any of the many transactions I've done. I dont know why the parties cannot come to a mutually agreeable closing date to avoid renting back.
As a buyer, I expect the seller to be moved out before closing and the home cleaned before the walk-through.
As a seller, I believe the buyer is owed the same consideration.
Boricua -- our relocation company dictated that we list our homes within 30 days of receiving a transfer and that we close within 45 days of accepting an offer on a home. This meant that we couldn't just postpone closing until we could move. Unless I wanted to move my children in the middle of the school year, we had to rent back. Since I always wanted to minimize the upheaval to my children's lives when we were transfered, I always wanted them to finish the school year where they were.
It wasn't an issue the two times we had to rent back out of 6 homes sold, nor was it an issue when we allowed the sellers to rent back for a short period on one of the 7 homes we've purchased.
In some parts of the country, renting back for a short period of time is more common then others. Other parts of the country, not so much. The OP should know how it's done if she can manage to rent back. She should also know that it does limit the buyer pool because many buyers will not allow a seller to rent back.
In both the instances where we rented back we were lucky. The first one sold for 97% of asking after only 3 days on the market and we rented back for 30 days. The second time the home sold the 5th day on the market, 3 offers, we accepted 105% of asking and we rented back for 60 days. So there definitely are buyers out there that will allow the sellers to rent back, although I'm sure in a seller's market it's more common.
We did the same thing only we were the Buyers and gave the Sellers thirty days after closing to do the "Date of Possession." Held back 10K at time of closing to be refunded upon our OK.
Worked out great, they took wonderful care of the house right up until the day they left and we felt good that we had given them time to say good-bye, pack up and clean the house!
PS. We did not charge any rent for the 30 days. We figured, like anyone going to closing, that the deal might collapse at the last minute on either side, so it was a gesture of faith on both sides...and it worked for the best!
We did check the house the day after they left and then called the title company to release the 10K being held in escrow. All were happy.
This message has been edited. Last edited by: Idaho Resident,
We paid our buyers 2 weeks rent in advance (which was as much as our full monthly mortgage payment) after the sale of our home last year. No deposit was required.
Start to finish everything took just 4 weeks, and closed just 1 week before my youngest daughter's wedding...which included lots of out-of-town family arriving and staying with us. Needless to say, the wedding had already been planned months in advance!
Because of the timing, moving out on the closing date of their choice just wasn't possible for us and our counter-offer for the 2 extra weeks was necessary and non-negotiable.
It was hectic but all worked out great. There was never even a walk-through at close nor at move out.
While we have never done this - we always moved in (or out) on the day we closed - I've known tons of people that have done it (in both directions). Here's my question - do you already have a contract, and if you do, is this already in there? If it's not, you may be out of luck, because many people start planning moving the minute they get a closing date, so if you already have a closing date, the new people might have already made plans to move in. If you haven't signed the contract, then you just put in the request as part of the negotiation... Worst that can happen is they say no....... (then, you either move on - or not let them buy the house)...
Posts: 3633 | Location: Northern Virginia, USA | Registered: May 29, 2003
Thanks for all the help and suggestions. We are not going to ask for a "rent back" but are requesting a larger upfront payment. Hopefully, the larger payment will lower our risk of having the buyers walk away from the deal?
Depends. If they have a financing clause or inspection clause, they can still get out with their deposit, no matter the size. (and be careful with the financing clause - the selling agent wrote in terms that were too true to be good, so we could have gotten out of our contract based on that, had we wanted to)
Also, your buyers may not have the cash available to do a larger deposit.
