rent back after closing

[Ummm]

let's say we make an offer on a house, we want to close in april. the seller wants to leave in june, but wants to close in april and rents back for 2 months.

what are the potential problems? they're willing to pay $1500 in damage deposit.

we haven't been landlord before...

their house is in good condition so they prob won't trash their house after it closes... hopefully.

[BTB]

My biggest question would be, why do they want to do that? Why not just close in June?

IMO it is a monster PITA to be a landlord, said after watching my parents struggle with it and finally give up. I can only imagine it's harder when the renters are the former owners!

When we were buying, I wasn't willing to consider a contract that allowed the previous owner to stay even one minute past closing. I had no trouble finding that, even when we bought a year ago. I'd be surprised if, in today's buyer-friendly market, the seller gave you a tough time if you asked for that.

[junkinmytrunk]

Well, we did this during the height of the housing boom with no troubles. We bought from a seller who did a rent back from us for 2 months, without issue. She needed the 2 extra months as she sold her property to us so quickly she was unable to find something she wanted to buy. So we accomodated her request. AND...she didn't even leave a security deposit with us :eek:. The fact that your potential "tenants" are willing to put $1500 in escrow for you bodes well in your favor. I wouldn't be too afraid of this sort of arrangement; in hot markets (like Los Angeles, where we bought / sold) it's fairly commonplace.

Good luck with your transaction.

[Ummm]

thanks. our market isn't that hot... prob a bit slow. but this house priced 'right' so there were 2 offers after 1 day on the market.

the reason they don't want to close in june instead is that they are moving out of state in june, and want it to be a done deal earlier (eg april) so they can buy in another state without having to worry about this house.

[malala]

We were the sellers in that situation. The buyers wanted to close soon for whatever reason, and that worked for us because we'd get a hold of our money earlier.

We were moving out of state into a new construction and were going to move into an apartment in the new state until our new house was ready.
Then we found out the sellers weren't actually gonna move into the house until school was over, so we asked if it was ok to rent back from them.
IIRC we paid for the 2 months rent in advance at closing.

We ended up moving out after a month and a week, and the buyers got to keep that extra rent $$ and I don't blame them for that.

In our case it worked out really well, but we were very lucky that our buyers were very nice people, and well there wasn't much that could go wrong for us, but we knew all along that we are good, honest people;)
All joking aside, I don't see what could go wrong if everything is in writing, and you get your rent plus maybe a deposit at closing.

Good luck:)

[Delaney21]

our market isn't that hot... prob a bit slow. but this house priced 'right' so there were 2 offers after 1 day on the market.

that sounds like a hot market compared to a lot right now...if we priced our house 'right' it would still be months before we got an offer

[thedoorchick]

This is quite common, and is no big deal.

Usually the rent is equal to the mortgage payment, so you're not making or losing any money (I'm sure this is negotiable, but typically in these situations it equals the mortgage, since it's for a very short time and isn't a typical rental situation).

Many times sellers will want to close earlier than they move because they need the funds for their new home, or for some other purpose. This is what happened when we bought our house. We closed at end of April and moved a month later.

[udsweetpea]

I would say the easiest answer to this is "contact your attorney".

[kindermom]

We did it 18 months ago. Our sellers wanted to close before they took over the payments on the house they were building. One months rent went into escrow. And they paid 2 months rent in advance. All of the details were done through our respective realtors. Once they moved out, we did another walk through to inspect the premises.

They did break a piece of concrete off the porch as they were moving and lost some of the deposit. Other than that, it was no big deal. It really felt like we closed early but it was not our house and we were not landlords.

[BTB]

Many times sellers will want to close earlier than they move because they need the funds for their new home, or for some other purpose.

I think there's a way around that - "100 Questions Every First Time Home-Buyer Should Ask" talks about bridge loans for sellers that let them have funds for their new home without needing to complicate the sale with a landlord/tenant relationship.

[thedoorchick]

I personally think that leasing the home back for a month's time is a lot less complicated than getting a whole other loan.

This is not your typical landlord-tenant relationship.

And I'm usually the first person to warn against taking these relationships lightly.

[Ummm]

thanks for all the suggestions!

[lml41981]

We sold our old house on 1/25/06 and closed on our new house on 2/15/06 (same day we had to be out of our old house...that was one hell of a hectic day).

We paid the pro-rated amount that would have been one month of our own mortgage payment. We didn't have to put anything in escrow and there was a written agreement that any routine repairs or damage would be our responsibility. The new owner did a walk-through the day before closing and we did a walk-through when we exchanged keys. It worked well...

That said, when we bought that house, the seller asked for a month's rent-back and we said no. Two days is pretty standard here, according to the Realtor we used. We didn't let them have more than that because our lease was running out. We also had battled back and forth with them over the price of the house and the inspection and repairs...plus there was something they didn't disclose that should have been... So, we weren't inclined to help them out much.

I'd say that if they're being considerate toward you and are working to make a pleasant deal, it can work. If there's resentment, then I wouldn't do it.

[justHB]

I personally think that leasing the home back for a month's time is a lot less complicated than getting a whole other loan.

This is not your typical landlord-tenant relationship.

And I'm usually the first person to warn against taking these relationships lightly.I agree wholeheartedly. We investigated both options and the easiest and most reasonable was for us to rent back for two weeks while our new house closed. The new owners were somewhat difficult (wanting to come by whenever because "we own it now" and having different ideas of what "clean and reasonable condition" meant and then demanding that we hire cleaners they stipulated), so my recommendation would be to use no vague terminology in the lease back contract. If you want the place spotless when you move in, stipulate that they will hire professionals and carpet cleaners. If you want to walk in at 5:01 p.m., make sure they're out by 3:00 p.m. Just be respectful of the fact that they ARE paying you to live there and be deliberate in your negotiations and everything should be fine.