If you are buying or selling a piece of property in a hot market, such as Seattle, you may want to consider including the option of “seller rent back” in the details of the deal. Not exactly sure what “seller rent back” is and whether or not it could benefit you? Here is a look at everything you need to know about this real estate option, including what it could do for your buying or selling situation.
What is “seller rent back”?
To put it simply, “seller rent back” allows the seller to live in a home even though he or she no longer owns it. Basically, you end up paying rent to the person or group that has purchased the property once escrow has closed. You pretty much become the tenant and they become the landlord. Although, it's really important to point out that it isn't as simple as it may seem. Both parties need to agree upon specific lease terms, such as security deposits, the amount of rent to be collected each month, the due dates for payments, what services will be covered by the agreement and who all is allowed to live on the property.
What are “rent back” options?
If you are looking to get involved in simple seller rent back after escrow, you will most likely need to need to fill out a short form known as a PRDS (seller occupancy after sale). There are some situations where the seller turned tenant will only need to stay in the home for a brief period of time. If planning to live on the property for 30 days or less, you'll need to fill out a CAR form, also known as a “possession addendum”. This form is a bit more lengthy than a PRDS, and you will definitely want to have your agent help you accurately fill out all of the details.
What warnings should I look for?
There are a few different details you should pay close attention to before making any serious commitment. For example, the contract could reserve the right for the new owner to check in on you at anytime, it might delegate all maintenance to the tenant and so on. Just make sure you read over every form carefully to ensure you know what you're getting into. If you still have any questions or concerns after looking over the contract, it's best to consult with your agent. He or she has likely handled a similar situation in the past, which means you'll be learning firsthand from an expert.
When it comes down to it, “seller rent back” could be a good option if you would like to relieve yourself of mortgage burden but still live in your home. If you are selling your property in a highly competitive market, you may want to consider exploring your rent back options. A real estate lawyer or tax attorney could also be really helpful when it comes to negotiating seller rent back after close of escrow.
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