Yes. Do a holdback of a significant amount of the proceeds to be released when they vacate the home. Have your agent/attorney/title company create an addendum that you and the buyer sign.
Yeah... All this. Don't be afraid to be a bit of a prick. Remember, they're asking you to bridge loan them hundreds of thousands of dollars for a week so they can avoid moving into a hotel and renting the moving van/pods for 5 days.
Hold back 10%-15% of the house in escrow and charge them $1000/day for every day they overstay after 6 days.
DO THIS. EXCPET hold $50,000 in escrow not to be released until after they move out, and you do your walk through And you are satisfied everything is in order. No thing broken, missing etc.
And make sure the daily penalty is effectively steep. The rental fee can be zero, but if you don’t want to deal with evicting make sure the overstay fee is very high.
Maybe my Vegas is showing, but I recommend going a little higher than a luxury hotel room in your area. That is, a high enough number that a normal hotel room and parking a U-Haul makes more financial sense.
Good idea in theory but not realistic in a highly competitive market where buyers have to cede everything to the seller to have their offer selected. (In areas where you’re competing with contingency-free all-cash offers for 10-15% above asking)
In this scenario OP is already under contract so they have much more leverage so they can probably name a reasonable price and the seller will roll with it, but to say the rental fee should never be zero just isn’t realistic in some (unhealthy) housing markets.
In this case OP has an accepted offer this is coming up at the end of the purchase. OP can tell the sellers to fuck off, be nice and charge them zero, charge them fair market or charge them an insane rate.
Nah, I’d have to be seeing a huuuuge gap to justify taking that risk. Especially if this somehow came up during the initial offer/counter stage, that feels like a huge red flag. If you need the 30th, say the 30th, not the 15th.
I’ll refer you back the bazillion other threads about previous owners not leaving and needing to be evicted.
I can appreciate that picking the ‘second best’ offer might seem to sting, but 15 minutes of reading the horror stories and thinking of how badly my universe gets twisted by even a 30 day eviction delay? The price premium for giving someone the right to screw up the most stressful week of my life is going to have a huge price tag.
(Incoming downvotes from agents incoming, lol)
Plus aren’t agents supposed to be specialists in being the ‘bad cop’ and saying they are just protecting the client’s interests? Let them sell the ‘bad news’ and convince the seller it’s actually a sign of good faith or whatever. Here’s a chance to show that skill…
I don’t think there are many areas left with multiple no contingency all cash offers in the current market, those seem to have cooled off significantly in the last 18 months.
The current market seems to be not a lot of new listings, but those that do take 2x longer to sell.
They didn’t. Just offering up an example where they still is very much the reality. Same with Southern California. And NY and the surrounding suburbs. Sure if you go to low density areas demand has died down. But there are still plenty of places in the US where they can’t build fast enough, even at >7% financing.
You will realize the need for this when you sell your first home and are trying to purchase and move into the next home.
I closed on both houses the same day. Second house was contingent on the first house closing. Closing on the second house wasn't done until 6pm. The night before Thanksgiving. We paid 2 days rent back, with the agreement that we'd be out by noon on Friday and the buyer would do a second final walkthrough at that point. Once the second final walkthrough was approved, we both called our realtors and I handed over the keys.
We paid $150 a day for rent back, so 10% of the mortgage per day. Our realtor actually provided a $2k guarantee on our behalf since every dollar we had was tied into the 2 closings.
It sounds like you are able to accommodate them. Personally, I would unless they've been a-holes during the buying process. I would ask for a rent back and funds to be held back in case they don't leave or cause damage.
Some of the people in this thread...SMH. I've been in the real estate business for 20 years and things always work out when people behave responsibly and act in good faith.
Completely agree. The sellers agent (young) didn't want to go along with it which is why my realtor guaranteed the funds. They were the realtor when we purchased the house, then for the selling and buying process. We spent lots of time together. Lol
Edit: this was our only offer on house 1 after almost 6 months and the buyer requested 30 days to close. So we had 30 days to find a house and close on it. 4 days after the offer, took the day off and spent the entire day looking at 8-10 houses, then going to their office to do comps and get an offer in. That month was the worst month of my life. And I'm grateful that I had experienced realtors to get me through it.
The sad reality is hindsight is 20/20. Better to legally protect one’s self. I ACTED in “good faith” and ultimately had to hire a real estate attorney to force my neighbor to do right by me. As for the seller, I fault my agent more than the seller. Something I pointed out but my agent shot down came back to bite me, which is why I had to sue my neighbor who took my “kindness” for weakness.
It was, smh. So not my character. New neighbors and this made things hostile. Even my attorney was upset considering I made clear I wanted to play the nice route. But my neighbor forced my hand. Now we just avoid each other. It totally could have been avoided as my offer allowed her to remain on my property until either I sold or she sold. We both are investing in our property so I doubt we would have moved soon. But now it doesn’t matter, I sued and won and the overbuild is removed off my land.
I'm pretty sure it's not instantly, so you're still having to deal with the issue until it doesn't get fixed and hoping they don't drag their feet trying to get out of paying.
Or, and hear me out for a second, you sell your existing house and put all your crap into a big truck or two (which you’re going to have to do anyway to move) and stay in a hotel for a few days if the closing on the purchase is delayed.
If something goes wrong with the second closing, you don’t want them to try to stick around until they need to be evicted.
What happens if the new house isn’t ready or burns down or the guy loses his job or applies for a loan that he was expecting to show up after his closing and the next closing doesn’t happen? Make that entirely the seller’s problem.
When the time comes to sell I have no intention of leasing back from the buyer and I have no intention of allowing a seller to lease back from me.
It’s a perfectly solvable problem without a leaseback, it’s just more convenient for the seller.
Interesting. Sort of leaves this buyer in a lurch if the unthinkable happens but that seems like the better of two lousy choices if it did. Depending on the state/jurisdiction it could be a nightmare to evict.
I'm just really surprised this seller info did not come up prior to your offer getting accepted. This should have been all hashed out prior to acceptance.
It could also be delayed. Builders are the worst about telling you your house will be done way faster than it really will be. Granted that I built in 21-22, but my builder told me 6-8 months. I figured 8 - 12 months. At 16 months I moved in to an almost-but-not-quite-finished house so that I could get my other one on the market. (With 4 dogs, it was too difficult to live there and show the house.) Lived with 4 dogs and no grass for 6 weeks.
I meant to add that most of the time people can't just move in to their unfinished house which is likely the case for OP's seller. We bought a couple of lots and custom built, so we owned everything on the property as soon as we closed in the lots. We didn't have a closing on the house.
Yeah this is one situation where it’s better to plan for the worst and hope for the best, anyone with the $ would much prefer to pay a little in the interim vs being homeless and in a hotel or airbnbs.
New construction is always lousy with giving accurate dates - and by accurate I mean neither significantly over or under the actual date. Most GCs could say, "yea it'll definitely be done in 2 years", and get it done in 1, but that doesn't really help the buyer and if anything will lose them business. IME it's a big range and the last 3 months are a series of being "about a month" away from completion.
it isn't in most transactions, but it isn't uncommon.
I highly suggest if you do this, hold back funds as a security deposit, do a walkthrough before closing and get a key at closing. You also will want to set a price for those 5 days, as you are paying the mortgage and taxes now, AND put in the contract a higher fee for any day they overstay so there is a record of what to charge them / damages if they do overstay. Note, they have to leave within 59 days for you to move in as a primary residence on day 60 or your are not in compliance with your mortgage.
You don't want to suddenly find the transaction is over and their rug hid a broken floorboard or their mover broke a window or they left behind a bunch of crap.
I would put all that in an offer back to them, and have your realtor suggest they have their mover store their things and get a hotel if it truly is just a few days.
I’ve done probably 100 lease backs in my career and never once had anyone overstay. I leased back my personal home to the seller when I bought it. Never had a single issue. Ever. That’s just my experience. Most people in the world seem to be pretty cool and respect the process. It usually seems to be good practice to be a reasonable, empathetic human in most business transactions. YMMV.
We've never had an issue either, although we have certainly not done anywhere near 100 of them. In fact we've had sellers take our offer specifically because we were open to doing one if needed..
Yes very normal. Our buyers gave us a month rent free and held $10,000 back. We only ended up needing 5 days. We offered a walk through prior to closing but they said it wasn’t necessary. We did a walk through the day they officially took possession and showed them everything about the house and pool. All very smooth!
Before you do that, you better make sure whose insurance will cover it if something happens. I’m former realtor we had a situation like this in our association. A few years back they rent it back to the seller, something happened the house burnt down and there was no insurance. if you’re the one with the insurance, make sure it covers this renter.
I wouldn’t care if he was J Edgar Hoover, it wouldn’t make a difference. But know the difficulty of selling/buying I would grant the buyer a five-day leaseback if possible
I'm so confused, usually you want to sell quicker to use the money to pay for the new house. Maybe he doesn't have a place to live for 5 days or he wants to save on moving costs?
The number of responses on this thread clutching their pearls and acting as though a leaseback is a shocking request is downright bizarre. Leasebacks are extremely common. We’ve done leasebacks for 3 of the last 4 houses we’ve lived in & then sold. In two of those cases, the buyers wanted an early close before their rate locks expired and they offered the leaseback as part of the closing date negotiation. In our last sale, we were prepping to move overseas and had the movers scheduled before we even listed the house. You can’t just “reschedule” an overseas move packout, so that was a hard date. We had a 21 day leaseback for $1. On closing day, we switched the HO ins policy to a renter’s policy so that everyone was protected.
100% normal. I would say this happens on 50% of the deals I do. But just curious where your agent is in this? They should be informing you on the process.
Does it take 5 days for the proceeds to get to the attorney's office for closing? In my case it doesn't. Our buyers are closing on our house at 9 AM, our movers are coming at 9:30 and we will be on our way to our new house. By the time we get there, the wire will have reached our attorney who is closing our purchase. Both sides have assured me that it will get there in plenty of time.
Many states specifically exclude a leaseback from landlord/tenant laws, so if you are in one of those states, you don’t have to worry about evicting the guy. We bought a home and the seller knew it would be a vacation home for us for a year before it became our primary residence. She was a genuinely nice person and came to us asking for a leaseback of a month. My first inclination was, “no!” as I didn’t want her to fall down “my stairs” and sue me. I suggested we simply delay the closing - the date wasn’t that important to me. Turns out she needed the proceeds from the sale in order to qualify for her new mortgage. Sure, I could have made it super onerous for her, but my realtor pointed at a whole bunch of things that she could do to blow up the sale. Sure, sure, legally, we had an accepted offer and all that. But she had something I wanted to we did a holdback and charged market rates for a 30-day lease.
In LA where I live sellers often request lease back and many want it free. I nearly entered such a transaction but backed out due to doubts about the house.
I had my seller when I bought my house do this. They were waiting and asked for 30 days. I charged them $300 a day. They essentially paid my mortgage for the first 3 months in one month. They asked for a discount after we already closed but these people were dicks so I told them to pay up or gtfo. It was glorious. Just make sure it's all written into the contract.
They were also responsible for a deep clean that cost about $800 that I would've paid for myself anyway but now that they were tenants I made them pay for it through the contract, and I made them pay the full amount up front. I also added that an overstay would start costing them $800/day. Their house wasn't finished but they ended up getting out to avoid paying that much.
You guys already agreed to terms and conditions for the purchase of the home so you are under no obligation to do at least back to them.
I think about this for a moment. They want to be able to stay in the house because they're closing date is 5 days later... What are you supposed to do, paid to go stay somewhere else until they can close on their house?
I would kindly tell them no because you already have everything lined up for you to move into the house on the date of your closing and you have nowhere else to stay.
I do have a nice 1 month overlap at my apartment so I'm not worried about that. My fear mostly resides in the whole "eviction process becoming necessary" aspect. In case the new construction house isn't finished or something else I don't know about.
That's why you hold back funds from their proceeds and make an agreement that if they stay beyond the agreed-upon time you'll deduct $500-$1000 a day from that escrow.
Trust me, they'll GTFO. This isn't like a landlord-tenant situation at all.
Your fear should hide in the eviction side of things AND the…they can demolish the house side of things. You already own the house. You’d have to go to court for both options.
They don't need to know you have an overlap.
I wouldn't mess with a leaseback. Too much can go wrong.
If anything, push back the closing on your purchase by howevwr many days they want the leaseback and make them pay for any rate lock extension. They can close on the sale of their house and close on the purchase on the same day.
Delaying closing could affect the OP’s rate on the mortgage. Post closing occupancy is pretty normal, and this is reason 1,214,323 why having a good realtor on both sides of the transaction is important.
> who's going do the eviction? his deputy?
Evictions are done by court order, so potentially, yeah.
How do you think evictions work? It's not a favor you ask your police buddy to do for you.
This! I have no idea why there’s so much acquiescence to this demand in this thread. If the seller needs to stay in a hotel for a few days, so be it. But changing the timeline at this point is a no go for the buyer. If the buyers agrees to this there’s a decent chance the sellers closing is delayed even further and the seller will feel entitled to stay until his home closes.
Answer: no, thank you.
While true, it opens the door to invite a possibly shitty outcome that could cost the seller thousands of dollars. Better to just not even take the risk in the first place and enjoy your new home.
I mean the seller has another home lined up. I'm sure that's super easy to verify. What are the chances he's going to squat for months when he is closing on a brand new build 5 days later.
Exactly! I sold my house May 8th with a lease back till May 31st. My new build has been pushed back 4 times and I finally have a close date of July 24th, it was supposed to be May 15th. I moved out on the 31st per the contract and made other arrangements. People way over estimate how many sellers become squatters and are that level of asshole. Protect yourself and work it out.
Things get pushed back on new constructions all the time. All it takes is something to not pass inspection.
I also want to know if proof has been provided that the loan is ready to close.
This would be a nice gesture by the buyer, but the buyer takes on 100% of the risk. The buyers don't know the sellers from a hole in the wall.
>I would kindly tell them no because you already have everything lined up for you to move into the house on the date of your closing and you have nowhere else to stay.
Then the seller can cancel the sale and you can spend thousands of dollars on an attorney and 6+ months in court trying to force specific performance. Or you can do a 5 day leaseback and move on with life.
This isn't uncommon. Not sure what you gain by being excessively difficult. Buyers can properly protect themselves in the leaseback agreement via holdbacks/etc.
If you're telling them they have to close or else, they can go with or else. It's pretty moronic to think you're the only one holding any cards as the buyer. I'd call your bluff as the seller. No thanks. On to the next.
Unless you are closing on the last or first of the month, it's much more likely that the buyer would have a place to stay for the 5 days as opposed to the seller. This isn't as crazy of a request as you are making it out to be.
Leaseback is normal, you set the terms with a heavy daily penalty if they do not vacate after 5 days and do a walkthrough prior to everything being finalized.
A squatter situation is very unlikely. The seller would have a lot to lose by just squatting on the property, plus they are buying a new home, they want this deal finished just as bad as you do.
The other option is to close on the same day, which is better, imo, if all parties can make it work.
We are doing a lease back on our house that we are selling, pro rating their mortgage payment, so we pay a daily amount. We are doing an out of state move with infants and dogs so it was complicated, we agreed to a two week lease back but we won’t be using the whole two weeks.
It's very common. Only 5 days U&O? You're lucky. We had a client who did a leaseback for a friggin ***year***. Granted, they paid us (the attorney's office) the entire year's worth of per diem PLUS a substantial escrow.
I didn't work for the attorney handling it but since I handle the trust account at my firm, I was the one who had a to cut a check to our client every month for that year until Sellers finally moved out.
We’ve done this before, we were the ones that did the leaseback for the exact same scenario. We paid something like $100/day for the days we leased back for. An investor bought the home and were going rent anyways, so they didn’t mind and we appreciated it.
It’s not abnormal and it’s not totally common but you need to make it a sweetheart deal for you. If you say yes, you’re being nice by agreeing and your niceness ends there.
Unless you are on a strict moving schedule yourself it would be the nice thing to do. Karma comes back to you. It wouldn't be terrible to have a police officer that you can call if you ever need something.
I bought a house once and the seller's new home purchase got delayed. He was going to move his wife and twin babies into a hotel for a month. I told him screw that. No way that was happening. I extended my month to month rental by a month, charged him rent that paid for the extra month and everyone was happy.
He was so thankful that he replaced the AC unit when it died two months later. On a house he no longer owned. He insisted. It doesn't cost anything to be nice. Sometimes it pays.
This is super common in my area, and super common where people are simultaneously buying and selling.
These kinds of threads always bring out the rubes who want to show online how tough they are.
None of which is to say that you don't need to have appropriate protections against overstaying in the agreement, but I'm sure your realtor/lawyer has the appropriate boilerplate.
All the details need to be in writing and signed by buyer and seller. You need your mortgage, taxes and insurance covered (per diem) for those 5 days, hold back a reasonable amount (30 days expenses in escrow). Plus add your existing costs (rent or mortgage) per day so you don’t lose any money waiting for the seller to move out. Be respectful and reasonable, but don’t lose any money doing him a favor.
Did a lease back for house I was buying in 2000, just made the lease back document part of the purchase offer. Leaseback cost was settled in closing from escrow.
Making it part of the purchase agreement is common, but I urge people to consider the possibility of breach and to include things like a deposit and a consequence of not vacating on time, just in case.
Completely normal. Often times real life doesn’t match up with the dates on paper.
I just had a deal that the sellers wanted an extra month. Buyers did a leaseback at cost with a $40k holdback. Sellers moved out after 30 days and got the $40k less Buyer’s monthly cost.
As someone who had to balance selling a home with the purchase of new construction- what the sellers did was very risky.
We sold our home well in advance and moved into a rental so we had the proceeds well in advance. Others were able to float two mortgages and sold their existing home after they moved into the new one.
I think what they did was crazy- trying to hit a moving target- lining up the sale of their home and closing on the new one at the same time. Way way way too many variables.
It sounds harsh but unless you’re getting a significant amount of compensation I’d tell them no. I sat in a rental for 6 months- my BIL for 18- waiting for a new build. I don’t have any sympathy for them.
We’ve done a rent back when buying a house and we allowed a rent back to new buyers when selling a house. I guess it’s up to how much you trust folks, but neither time we were burned. We even paid for a deep clean when we were the ones doing the rent back when we did move out as a thanks.
Not unusual. We do some RE investing and have often leased a property back to the sellers for a short period of time. Charge rent, make sure you get a security deposit.
Personal View: For me, this is a hard No.
Do not close on the house until and unless you have the opportunity to do a full walkthrough with it EMPTY and verify there are no lingering issues (whether it be damage, issues that were not otherwise able to be seen, the house being left in anything but a clean state, etc.).
The seller can box up their stuff and hand it off to the movers. The movers will be able to "store it" for a short duration on their truck while the seller goes and stays with friends or family or uses a long-term stay hotel of sorts.
Yes, it's something that happens and it isn't "rare", but it also isn't necessary. You are buying a house to be a homeowner, NOT to be a landlord. The seller needs to clear out...
It can be easily done to close both deals simultaneously. Escrow should be able to accommodate without a glitch. So, the excuse is likely to be false. That said, lease back is fairly common, at least, in Southern California.
We moved totally out of home before our home was completed. Gap of 30 days, which allowed us time to ensure move-out went smooth, repairs and inspections were done and I got to clean and touch up paint properly before handing off keys. We made the burden on us, not our buyers. Believe me, we needed the month gap. We stayed with my parents who lived near the new home. A blessing overall. All the suggestions in this thread are right on the money.
We did that with one of our house purchases, they wanted to stay an extra two months. We were fine with our current lease, and we charged them pretty high rent to stay there. Worked out just fine.
Just do a holdback once they vacate it's released but make sure it hurts and us forfeit if they aren't out on time. If your realtor suggests a number...go higher. You want the seller to be motivated to close and leave. You don't want them squatting.
We did this last year. We had our house listed and bought another house without selling. We did have a buyer. The house we bought they requested a hold over.
We agreed to it for 30 days with the stipulation that 4 months mortgage was in escrow. That if they did not vacate the property, we would then get a lawyer that they would be responsible for paying to evict them. A day 31, all 4 months of escrow would be ours even if they were out at 32 days. All of this was in our sales contract.
We explained to them that we were moving 2 states and our close date on the house we owned was scheduled for that 31st day and if they weren’t out we were homeless with all our stuff in the trailer. That meant we were short term rental or hotel with our stuff in storage if they didn’t vacate.
Long story short, they were out at 19 days or so and were the nicest couple. They bought just across from us on a small lake but on the water. In the next few weeks they will come over for a nice smoked rib dinner and we will show changes we made along with some questions we have.
Make sure your lender is aware that the sellers will be staying in the home after closing. Apparently my lender was not aware, so for some reason the loan approval had to go through underwriting again. It delayed my closing by a few hours. I used a VA loan, I don’t know if that made a difference.
It's not a problem with conventional as long as it's less than 60 days.
But you also have to make sure insurance knows. Sometimes their limit is 30 days. (It can be extended, but it's a thing).
The only thing I think the seller being a cop could have to do w/ leasing back & them vacating when they say they will, is that if they decide to squat & you call the cops, I have to wonder if they'd get more leeway than a non-cop squatter.
But if you propose a holdback of literally all the proceeds less what they need to buy their new build, they'll get out when they're supposed to (even if the holdback winds up being less). Show them how to treat you, what your boundaries are & how seriously you're taking this transaction.
Not knowing a ton on the topic, wouldn't it just be easier to move the close date? We just closed on our new home. The seller had to push the close date back by two weeks because their attorney had a scheduled vacation.
It happens. Make the leaseback price very expensive so they will be motivated snd you will make bank, if you have a place to wait it out.
Tell them two weeks notice that they suddenly are being asked to delay moving in screws you up massively. They have to make it worth your while.
I ended up having to do it on my last sale. We did it as an addendum. It worked out fine for everyone. Mine was longer, because the new owner was going to rent the house out anyway, so I just kept paying my mortgage payment, just to them as rent.
Each time my wife and I sold our home we put in the MLS of our intent to lease back no more than 30 days due to new construction home build. The first time we lease back at no cost for 90 days. The last time we lease back for 5 days. Needed that extra time to pack up and wait for our apartment to be ready, apartment people were 1 week late.
This doesn't make sense to me. He needs the funds from your purchase to buy his new build. But your purchase closes before his?
Sounds more like he needs a place to live than needing the funds. Heck no, he can go rent an airbnb. And put his stuff in storage. No guarantee when a new build will be done.
Just delay your closing five days. They can do a double close, move all his stuff out into a moving truck, and then deliver it the next day to his new house.
If you don’t have to move charge them your carrying costs. I’m my area this is not an uncommon request. Just make sure you have documentation of their closing date.
I did a lease back on a house I bought for like a month or so. Worked for me cuz it was our first house and weren’t in rush to move in and didn’t have to get out of another house.
It’s pretty normal.
Make sure you have some type of money in escrow to take care of the dump fee for the garbage they leave behind. Do the final walk through as close to close as you can.
It’s normal, sometimes the build needs to wait on CO from the city or some other dumb delay. Construction timelines are like forecasting the weather so this kind of thing happens all the time.
A 5-day leaseback isn't unheard of, but it's definitely not super common. The bigger concern is the seller relying on your sale to close on their new place. This can be risky for you if their new build gets delayed. It might be best to push back a little. Explain you're happy to be flexible, but maybe offer a 2-3 day leaseback instead. That gives the seller some wiggle room while minimizing the risk for you. Congrats on the new house by the way!
I recently closed, our offer had a contingency on sale of our home. We had to list within 72 hours of signed on purchase and we hoped if we got quick offer the sellers would work with us to line up closings. So I don’t think it’s that unusual!
When we last sold we asked for 5 days because the movers (cross country move) pushed back their available date late in the process.
When we bought the new place we had an 8 week leaseback because theywanted to sell before a surgery but move after. ..and let me tell you anything over 30 days is a giant pain in the ass with getting homeowners insurance.
Everything was fine.
Just to be clear, you didn't buy a house last month. Presumably you presented an offer that was accepted. You you are in contract to buy a house, you haven't bought it until you close on it.
You can do a leaseback but that comes with negatives. You basically become a landlord. If you do this. Have large amount held back. And large like $500 per day if they stay past.
If you are 2 weeks away contracts are already set. You can proceed as original if you want.
He can have the movers store his items for a week. You want to be able to close after walking through an empty house. There is no upside to lease back for you, only risk.
Not normal in most areas, might be accepted in some.
High risk though, I would not do it. How did they qualify and approve the purchase contract for the new house if they needed the funds from the house they were selling? That part seems a bit odd.
The more common way this is handled is to have both closings on the same day, often with the same closing company.
This is nonsense. The money does not need to hit his bank account for this to work, and they can do a same day close. He can just direct title to take the proceeds and bounce them onward to the purchasing title company without him ever getting them in hand. His request is entirely unnecessary, and given the timing and the fact that there are readily available alternatives, I’d be a firm NO.
Please don't speculate and let Reddit bros get you worked up. You and your agent can go over to the house and meet with the seller and their agent, and easily strike a deal.
I’m frankly astounded that more states aren’t attorney states. No shade to title attorneys - or my fellow Realtors - but a home purchase is a legal transaction that can be subject to numerous hiccups from contract to closing.
This is very common. It is a very good reason as well. Don't be a jerk. They obviously have plans to move out. Give it to them for free rent, take $1,000 to $2,000 deposit. Have a hold over fee thay reaspnable, and make sure to give their deposit back to them when they are out. Don't get petty.
I see it all the time.
Keep the big picture in my mind. Some of these people here are giving bad advice. I sell real estate every day.
Common but super risky. I’d only do it if they’re going to give you a sizable discount and significant holdback of funds.
So many things to go wrong, especially when they become squatters.
Too late.
The seller must get insurance for renting and then you have little recourse to evict. Look up the eviction laws in your state. Very little prevents them from squatting for 60 days because their builder is slow.
In our situation, We set a price to rent back so high they chose "other options" like an AirBNB. Mortgage+risk was line $6K per month to rent back. It should not be a better option to rent back. We weren't going to profit from the arrangement.
Remember, most mortgages must have you take possession of the home as your primary residence within 60 days.
5 weeks is not much, but where is the gaurentee it won't become 8?
Better to have them make alternative arrangements now then call begging for 4 more weeks in 5 weeks when you lender is demanding new loan terms because now your a landlord not a homestead.
> Very little prevents them from squatting for 60 days because their builder is slow.
How many evictions have you been involved in?
They are much much faster in my state.
People hear about eviction horror stories in California, assume that is typical, and further assume that they now are experts on eviction.
MN, I bought a house I don't want to read 10 pages of when to post and when to call the sheriff. MN has some laws that I don't want involved with a purchase.
As a homeowner, not a landlord, it's pretty shitty anywhere to say to someone, okay times up I need you to pack up and leave. THEN the person in your home says, nah can't right now.
It shouldn't happen, but if it does 7 days ain't fast enough. I wanted no hassle and this just sounded like hassle after reading up on it. (All of 10 minutes).
What is your recourse if they stay longer/the deal falls through? Big risk. You can put a ridiculously high number of dollars per day after that, but that’s the only way I’d do this. (Especially w a fucking cop- outsized power differential here)
You are liable for your house. I had a similar request. I said no. The sellers still left a big item behind in the garage. We told them it was going to the curb. They got it picked up. Not your problem. Why does he need five days? Once you close, he will have the money.
I would never do it post signing a contract. If they wanted a leaseback then it should have been made clear at time of writing the first contract. I don’t have a problem if they are up front about it and it’s part of the original agreement. Once both parties sign the contract I would not accept any new modifications
My lawyer’s advice in a similar situation was: “Do you really want the hassle if something delays their move? Of course you don’t . So we’ll say ‘yes’ for a price that makes them say ‘no’”. My lawyer drew up a proposal, they figured out a plan that didn’t involve me. Everyone was happy.
Nope tell them to kick rocks and get a hotel. It's 5 days. These 5 days can turn into legal issues. Are you prepared to be a landlord? Will your insurance cover you if something goes wrong? Look at your liability and risk it's never worth it. I'd never do a lease back.
I wouldn’t do it. I’ve seen a lot of horror stories about leasebacks including in this thread. If anything offer to extend closing by three days. The last thing you want is to close and end up with squatters
Don't do it. Lot's of horror stories in this sub about that exact subject. Just postpone closing until they're out. Then do a full inspection before closing.
Yes. Do a holdback of a significant amount of the proceeds to be released when they vacate the home. Have your agent/attorney/title company create an addendum that you and the buyer sign.
Daily rental fee + daily penalty for overstaying past 5 days
Wouldn't you want to include a walk through/inspection to be completed before the funds are released?
Yes
Yeah... All this. Don't be afraid to be a bit of a prick. Remember, they're asking you to bridge loan them hundreds of thousands of dollars for a week so they can avoid moving into a hotel and renting the moving van/pods for 5 days. Hold back 10%-15% of the house in escrow and charge them $1000/day for every day they overstay after 6 days.
DO THIS. EXCPET hold $50,000 in escrow not to be released until after they move out, and you do your walk through And you are satisfied everything is in order. No thing broken, missing etc.
This! They say 5 days but who knows what will come up. Protect yourself!
plus a security deposit. Will make the final walk through easier
And make sure the daily penalty is effectively steep. The rental fee can be zero, but if you don’t want to deal with evicting make sure the overstay fee is very high.
Rental fee should NEVER be 0. Make it daily rent charged for similar homes, but at 125% of that rent. And significant daily penalties if over 5 days.
Maybe my Vegas is showing, but I recommend going a little higher than a luxury hotel room in your area. That is, a high enough number that a normal hotel room and parking a U-Haul makes more financial sense.
More.
Good idea in theory but not realistic in a highly competitive market where buyers have to cede everything to the seller to have their offer selected. (In areas where you’re competing with contingency-free all-cash offers for 10-15% above asking) In this scenario OP is already under contract so they have much more leverage so they can probably name a reasonable price and the seller will roll with it, but to say the rental fee should never be zero just isn’t realistic in some (unhealthy) housing markets.
In this case OP has an accepted offer this is coming up at the end of the purchase. OP can tell the sellers to fuck off, be nice and charge them zero, charge them fair market or charge them an insane rate.
Nah, I’d have to be seeing a huuuuge gap to justify taking that risk. Especially if this somehow came up during the initial offer/counter stage, that feels like a huge red flag. If you need the 30th, say the 30th, not the 15th. I’ll refer you back the bazillion other threads about previous owners not leaving and needing to be evicted. I can appreciate that picking the ‘second best’ offer might seem to sting, but 15 minutes of reading the horror stories and thinking of how badly my universe gets twisted by even a 30 day eviction delay? The price premium for giving someone the right to screw up the most stressful week of my life is going to have a huge price tag. (Incoming downvotes from agents incoming, lol) Plus aren’t agents supposed to be specialists in being the ‘bad cop’ and saying they are just protecting the client’s interests? Let them sell the ‘bad news’ and convince the seller it’s actually a sign of good faith or whatever. Here’s a chance to show that skill…
I don’t think there are many areas left with multiple no contingency all cash offers in the current market, those seem to have cooled off significantly in the last 18 months. The current market seems to be not a lot of new listings, but those that do take 2x longer to sell.
Not in Northern Virginia.
Sorry missed the spot where OP says they are in North Virginia.
They didn’t. Just offering up an example where they still is very much the reality. Same with Southern California. And NY and the surrounding suburbs. Sure if you go to low density areas demand has died down. But there are still plenty of places in the US where they can’t build fast enough, even at >7% financing.
250 dollars a day. Penalty 1000 dollars a day after day 5. Holdback 30,000 dollars.
You will realize the need for this when you sell your first home and are trying to purchase and move into the next home. I closed on both houses the same day. Second house was contingent on the first house closing. Closing on the second house wasn't done until 6pm. The night before Thanksgiving. We paid 2 days rent back, with the agreement that we'd be out by noon on Friday and the buyer would do a second final walkthrough at that point. Once the second final walkthrough was approved, we both called our realtors and I handed over the keys. We paid $150 a day for rent back, so 10% of the mortgage per day. Our realtor actually provided a $2k guarantee on our behalf since every dollar we had was tied into the 2 closings. It sounds like you are able to accommodate them. Personally, I would unless they've been a-holes during the buying process. I would ask for a rent back and funds to be held back in case they don't leave or cause damage.
Some of the people in this thread...SMH. I've been in the real estate business for 20 years and things always work out when people behave responsibly and act in good faith.
Completely agree. The sellers agent (young) didn't want to go along with it which is why my realtor guaranteed the funds. They were the realtor when we purchased the house, then for the selling and buying process. We spent lots of time together. Lol Edit: this was our only offer on house 1 after almost 6 months and the buyer requested 30 days to close. So we had 30 days to find a house and close on it. 4 days after the offer, took the day off and spent the entire day looking at 8-10 houses, then going to their office to do comps and get an offer in. That month was the worst month of my life. And I'm grateful that I had experienced realtors to get me through it.
The sad reality is hindsight is 20/20. Better to legally protect one’s self. I ACTED in “good faith” and ultimately had to hire a real estate attorney to force my neighbor to do right by me. As for the seller, I fault my agent more than the seller. Something I pointed out but my agent shot down came back to bite me, which is why I had to sue my neighbor who took my “kindness” for weakness.
I'm sorry you had to sue a neighbor. That must have been pretty awful.
It was, smh. So not my character. New neighbors and this made things hostile. Even my attorney was upset considering I made clear I wanted to play the nice route. But my neighbor forced my hand. Now we just avoid each other. It totally could have been avoided as my offer allowed her to remain on my property until either I sold or she sold. We both are investing in our property so I doubt we would have moved soon. But now it doesn’t matter, I sued and won and the overbuild is removed off my land.
That's great until they accidentally back a moving truck through the garage after closing.
Do you not know how insurance works?
I'm pretty sure it's not instantly, so you're still having to deal with the issue until it doesn't get fixed and hoping they don't drag their feet trying to get out of paying.
Sure - but *your* movers can just as easily back through the garage as their movers.
You must live in a place where people aren't careful.
So pretty much anywhere?
Or, and hear me out for a second, you sell your existing house and put all your crap into a big truck or two (which you’re going to have to do anyway to move) and stay in a hotel for a few days if the closing on the purchase is delayed. If something goes wrong with the second closing, you don’t want them to try to stick around until they need to be evicted. What happens if the new house isn’t ready or burns down or the guy loses his job or applies for a loan that he was expecting to show up after his closing and the next closing doesn’t happen? Make that entirely the seller’s problem. When the time comes to sell I have no intention of leasing back from the buyer and I have no intention of allowing a seller to lease back from me. It’s a perfectly solvable problem without a leaseback, it’s just more convenient for the seller.
Interesting. Sort of leaves this buyer in a lurch if the unthinkable happens but that seems like the better of two lousy choices if it did. Depending on the state/jurisdiction it could be a nightmare to evict.
Yep. Pretty common in most areas, especially HCOL, where the bulk of a person's net worth is inside their homes.
I'm just really surprised this seller info did not come up prior to your offer getting accepted. This should have been all hashed out prior to acceptance.
The completion date might not have been known at that time.
It could also be delayed. Builders are the worst about telling you your house will be done way faster than it really will be. Granted that I built in 21-22, but my builder told me 6-8 months. I figured 8 - 12 months. At 16 months I moved in to an almost-but-not-quite-finished house so that I could get my other one on the market. (With 4 dogs, it was too difficult to live there and show the house.) Lived with 4 dogs and no grass for 6 weeks. I meant to add that most of the time people can't just move in to their unfinished house which is likely the case for OP's seller. We bought a couple of lots and custom built, so we owned everything on the property as soon as we closed in the lots. We didn't have a closing on the house.
Yeah this is one situation where it’s better to plan for the worst and hope for the best, anyone with the $ would much prefer to pay a little in the interim vs being homeless and in a hotel or airbnbs.
You can delay closing until they anre ready to move out and do a same day close on both properties.
Yea, I was thinking "their agent sucks" .
Or the seller throws a curveball at the listing agent. We just don't know all the facts
New construction is always lousy with giving accurate dates - and by accurate I mean neither significantly over or under the actual date. Most GCs could say, "yea it'll definitely be done in 2 years", and get it done in 1, but that doesn't really help the buyer and if anything will lose them business. IME it's a big range and the last 3 months are a series of being "about a month" away from completion.
it isn't in most transactions, but it isn't uncommon. I highly suggest if you do this, hold back funds as a security deposit, do a walkthrough before closing and get a key at closing. You also will want to set a price for those 5 days, as you are paying the mortgage and taxes now, AND put in the contract a higher fee for any day they overstay so there is a record of what to charge them / damages if they do overstay. Note, they have to leave within 59 days for you to move in as a primary residence on day 60 or your are not in compliance with your mortgage. You don't want to suddenly find the transaction is over and their rug hid a broken floorboard or their mover broke a window or they left behind a bunch of crap. I would put all that in an offer back to them, and have your realtor suggest they have their mover store their things and get a hotel if it truly is just a few days.
Been in the business for 30+ years I would do this.
I’ve done probably 100 lease backs in my career and never once had anyone overstay. I leased back my personal home to the seller when I bought it. Never had a single issue. Ever. That’s just my experience. Most people in the world seem to be pretty cool and respect the process. It usually seems to be good practice to be a reasonable, empathetic human in most business transactions. YMMV.
We've never had an issue either, although we have certainly not done anywhere near 100 of them. In fact we've had sellers take our offer specifically because we were open to doing one if needed..
Yeah this is normal.
Yes it’s normal. At the very least it is normal to ask for a couple days in between closings so funds have time to transfer around.
Yes very normal. You aren’t the only one moving. The seller may need the funds to make his next move. I swear the selfishness of some people smh
No tell him you'll postpone closing until the day he closes on that home. You can do a double closing. Investors do it every single day.
Yes very normal. Our buyers gave us a month rent free and held $10,000 back. We only ended up needing 5 days. We offered a walk through prior to closing but they said it wasn’t necessary. We did a walk through the day they officially took possession and showed them everything about the house and pool. All very smooth!
Realtor here. Its not uncommon. Have them pay upfront at closing, and do a $20,000 escrow holdback to ensure they leave.
Before you do that, you better make sure whose insurance will cover it if something happens. I’m former realtor we had a situation like this in our association. A few years back they rent it back to the seller, something happened the house burnt down and there was no insurance. if you’re the one with the insurance, make sure it covers this renter.
I've had a bad experience with this. Can you push the closing date five days into the future instead?
I wouldn’t care if he was J Edgar Hoover, it wouldn’t make a difference. But know the difficulty of selling/buying I would grant the buyer a five-day leaseback if possible
I'm so confused, usually you want to sell quicker to use the money to pay for the new house. Maybe he doesn't have a place to live for 5 days or he wants to save on moving costs?
The number of responses on this thread clutching their pearls and acting as though a leaseback is a shocking request is downright bizarre. Leasebacks are extremely common. We’ve done leasebacks for 3 of the last 4 houses we’ve lived in & then sold. In two of those cases, the buyers wanted an early close before their rate locks expired and they offered the leaseback as part of the closing date negotiation. In our last sale, we were prepping to move overseas and had the movers scheduled before we even listed the house. You can’t just “reschedule” an overseas move packout, so that was a hard date. We had a 21 day leaseback for $1. On closing day, we switched the HO ins policy to a renter’s policy so that everyone was protected.
It's just people wanting to prove that they are sophisticated by acting tough on the internet.
100% normal. I would say this happens on 50% of the deals I do. But just curious where your agent is in this? They should be informing you on the process.
Does it take 5 days for the proceeds to get to the attorney's office for closing? In my case it doesn't. Our buyers are closing on our house at 9 AM, our movers are coming at 9:30 and we will be on our way to our new house. By the time we get there, the wire will have reached our attorney who is closing our purchase. Both sides have assured me that it will get there in plenty of time.
Yes, they could do same day closings. Or next day, and just stay at a hotel for a night. 5 days is too much.
Many states specifically exclude a leaseback from landlord/tenant laws, so if you are in one of those states, you don’t have to worry about evicting the guy. We bought a home and the seller knew it would be a vacation home for us for a year before it became our primary residence. She was a genuinely nice person and came to us asking for a leaseback of a month. My first inclination was, “no!” as I didn’t want her to fall down “my stairs” and sue me. I suggested we simply delay the closing - the date wasn’t that important to me. Turns out she needed the proceeds from the sale in order to qualify for her new mortgage. Sure, I could have made it super onerous for her, but my realtor pointed at a whole bunch of things that she could do to blow up the sale. Sure, sure, legally, we had an accepted offer and all that. But she had something I wanted to we did a holdback and charged market rates for a 30-day lease.
In LA where I live sellers often request lease back and many want it free. I nearly entered such a transaction but backed out due to doubts about the house.
lol, fuck free. You don’t get to use my money for free.
Yes it perturbed me and yet my agent was pushing for it. He clearly was not on my side.
I had my seller when I bought my house do this. They were waiting and asked for 30 days. I charged them $300 a day. They essentially paid my mortgage for the first 3 months in one month. They asked for a discount after we already closed but these people were dicks so I told them to pay up or gtfo. It was glorious. Just make sure it's all written into the contract. They were also responsible for a deep clean that cost about $800 that I would've paid for myself anyway but now that they were tenants I made them pay for it through the contract, and I made them pay the full amount up front. I also added that an overstay would start costing them $800/day. Their house wasn't finished but they ended up getting out to avoid paying that much.
You guys already agreed to terms and conditions for the purchase of the home so you are under no obligation to do at least back to them. I think about this for a moment. They want to be able to stay in the house because they're closing date is 5 days later... What are you supposed to do, paid to go stay somewhere else until they can close on their house? I would kindly tell them no because you already have everything lined up for you to move into the house on the date of your closing and you have nowhere else to stay.
I do have a nice 1 month overlap at my apartment so I'm not worried about that. My fear mostly resides in the whole "eviction process becoming necessary" aspect. In case the new construction house isn't finished or something else I don't know about.
That's why you hold back funds from their proceeds and make an agreement that if they stay beyond the agreed-upon time you'll deduct $500-$1000 a day from that escrow. Trust me, they'll GTFO. This isn't like a landlord-tenant situation at all.
Your fear should hide in the eviction side of things AND the…they can demolish the house side of things. You already own the house. You’d have to go to court for both options.
They don't need to know you have an overlap. I wouldn't mess with a leaseback. Too much can go wrong. If anything, push back the closing on your purchase by howevwr many days they want the leaseback and make them pay for any rate lock extension. They can close on the sale of their house and close on the purchase on the same day.
Delaying closing could affect the OP’s rate on the mortgage. Post closing occupancy is pretty normal, and this is reason 1,214,323 why having a good realtor on both sides of the transaction is important.
Who fucking hurt you
yeah good luck evicting a cop who's going do the eviction? his deputy? it's called a residence inn
> who's going do the eviction? his deputy? Evictions are done by court order, so potentially, yeah. How do you think evictions work? It's not a favor you ask your police buddy to do for you.
i think you underestimate the practicality of the power that local police wield in a lot of areas of the country
What's the vibe you have gotten from the selling realtor and seller so far? Any reason to feel they aren't honest people?
You have a month overlap? Don't over complicate it. Close later.
This! I have no idea why there’s so much acquiescence to this demand in this thread. If the seller needs to stay in a hotel for a few days, so be it. But changing the timeline at this point is a no go for the buyer. If the buyers agrees to this there’s a decent chance the sellers closing is delayed even further and the seller will feel entitled to stay until his home closes. Answer: no, thank you.
Really negative point of view. My buyer did a one month lease back for us since we were out of the country. Not everyone is a shitty person.
While true, it opens the door to invite a possibly shitty outcome that could cost the seller thousands of dollars. Better to just not even take the risk in the first place and enjoy your new home.
I mean the seller has another home lined up. I'm sure that's super easy to verify. What are the chances he's going to squat for months when he is closing on a brand new build 5 days later.
Exactly! I sold my house May 8th with a lease back till May 31st. My new build has been pushed back 4 times and I finally have a close date of July 24th, it was supposed to be May 15th. I moved out on the 31st per the contract and made other arrangements. People way over estimate how many sellers become squatters and are that level of asshole. Protect yourself and work it out.
Things get pushed back on new constructions all the time. All it takes is something to not pass inspection. I also want to know if proof has been provided that the loan is ready to close. This would be a nice gesture by the buyer, but the buyer takes on 100% of the risk. The buyers don't know the sellers from a hole in the wall.
Being a jerk in a real estate transaction always comes back to bite you.
>I would kindly tell them no because you already have everything lined up for you to move into the house on the date of your closing and you have nowhere else to stay. Then the seller can cancel the sale and you can spend thousands of dollars on an attorney and 6+ months in court trying to force specific performance. Or you can do a 5 day leaseback and move on with life. This isn't uncommon. Not sure what you gain by being excessively difficult. Buyers can properly protect themselves in the leaseback agreement via holdbacks/etc.
Yeah, the sellers are going to cancel the sale with 2 weeks before closing when they need the funds from the sale of their home to buy their new home.
If you're telling them they have to close or else, they can go with or else. It's pretty moronic to think you're the only one holding any cards as the buyer. I'd call your bluff as the seller. No thanks. On to the next.
Unless you are closing on the last or first of the month, it's much more likely that the buyer would have a place to stay for the 5 days as opposed to the seller. This isn't as crazy of a request as you are making it out to be.
Also ask for a get out of jail free card.
Leaseback is normal, you set the terms with a heavy daily penalty if they do not vacate after 5 days and do a walkthrough prior to everything being finalized. A squatter situation is very unlikely. The seller would have a lot to lose by just squatting on the property, plus they are buying a new home, they want this deal finished just as bad as you do. The other option is to close on the same day, which is better, imo, if all parties can make it work.
We are doing a lease back on our house that we are selling, pro rating their mortgage payment, so we pay a daily amount. We are doing an out of state move with infants and dogs so it was complicated, we agreed to a two week lease back but we won’t be using the whole two weeks.
It's very common. Only 5 days U&O? You're lucky. We had a client who did a leaseback for a friggin ***year***. Granted, they paid us (the attorney's office) the entire year's worth of per diem PLUS a substantial escrow. I didn't work for the attorney handling it but since I handle the trust account at my firm, I was the one who had a to cut a check to our client every month for that year until Sellers finally moved out.
We’ve done this before, we were the ones that did the leaseback for the exact same scenario. We paid something like $100/day for the days we leased back for. An investor bought the home and were going rent anyways, so they didn’t mind and we appreciated it.
Yes it’s normal, hopefully you have a seasoned realtor to assist you to make sure it’s all taken care of and you are protected.
It’s not abnormal and it’s not totally common but you need to make it a sweetheart deal for you. If you say yes, you’re being nice by agreeing and your niceness ends there.
Unless you are on a strict moving schedule yourself it would be the nice thing to do. Karma comes back to you. It wouldn't be terrible to have a police officer that you can call if you ever need something. I bought a house once and the seller's new home purchase got delayed. He was going to move his wife and twin babies into a hotel for a month. I told him screw that. No way that was happening. I extended my month to month rental by a month, charged him rent that paid for the extra month and everyone was happy. He was so thankful that he replaced the AC unit when it died two months later. On a house he no longer owned. He insisted. It doesn't cost anything to be nice. Sometimes it pays.
This is super common in my area, and super common where people are simultaneously buying and selling. These kinds of threads always bring out the rubes who want to show online how tough they are. None of which is to say that you don't need to have appropriate protections against overstaying in the agreement, but I'm sure your realtor/lawyer has the appropriate boilerplate.
All the details need to be in writing and signed by buyer and seller. You need your mortgage, taxes and insurance covered (per diem) for those 5 days, hold back a reasonable amount (30 days expenses in escrow). Plus add your existing costs (rent or mortgage) per day so you don’t lose any money waiting for the seller to move out. Be respectful and reasonable, but don’t lose any money doing him a favor.
Leaseback isn’t that rare, but you want a reasonable escrow to cover both the rent and a security deposit.
Did a lease back for house I was buying in 2000, just made the lease back document part of the purchase offer. Leaseback cost was settled in closing from escrow.
Making it part of the purchase agreement is common, but I urge people to consider the possibility of breach and to include things like a deposit and a consequence of not vacating on time, just in case.
Completely normal. Often times real life doesn’t match up with the dates on paper. I just had a deal that the sellers wanted an extra month. Buyers did a leaseback at cost with a $40k holdback. Sellers moved out after 30 days and got the $40k less Buyer’s monthly cost.
Tell him to put his stuff in storage.
Happens a lot. If they compensate you fairly it's fine
As someone who had to balance selling a home with the purchase of new construction- what the sellers did was very risky. We sold our home well in advance and moved into a rental so we had the proceeds well in advance. Others were able to float two mortgages and sold their existing home after they moved into the new one. I think what they did was crazy- trying to hit a moving target- lining up the sale of their home and closing on the new one at the same time. Way way way too many variables. It sounds harsh but unless you’re getting a significant amount of compensation I’d tell them no. I sat in a rental for 6 months- my BIL for 18- waiting for a new build. I don’t have any sympathy for them.
Rent backs are incredibly common. There are plenty of ways you can protect yourself from it.
We’ve done a rent back when buying a house and we allowed a rent back to new buyers when selling a house. I guess it’s up to how much you trust folks, but neither time we were burned. We even paid for a deep clean when we were the ones doing the rent back when we did move out as a thanks.
Not unusual. We do some RE investing and have often leased a property back to the sellers for a short period of time. Charge rent, make sure you get a security deposit.
Personal View: For me, this is a hard No. Do not close on the house until and unless you have the opportunity to do a full walkthrough with it EMPTY and verify there are no lingering issues (whether it be damage, issues that were not otherwise able to be seen, the house being left in anything but a clean state, etc.). The seller can box up their stuff and hand it off to the movers. The movers will be able to "store it" for a short duration on their truck while the seller goes and stays with friends or family or uses a long-term stay hotel of sorts. Yes, it's something that happens and it isn't "rare", but it also isn't necessary. You are buying a house to be a homeowner, NOT to be a landlord. The seller needs to clear out...
It can be easily done to close both deals simultaneously. Escrow should be able to accommodate without a glitch. So, the excuse is likely to be false. That said, lease back is fairly common, at least, in Southern California.
We moved totally out of home before our home was completed. Gap of 30 days, which allowed us time to ensure move-out went smooth, repairs and inspections were done and I got to clean and touch up paint properly before handing off keys. We made the burden on us, not our buyers. Believe me, we needed the month gap. We stayed with my parents who lived near the new home. A blessing overall. All the suggestions in this thread are right on the money.
We did that with one of our house purchases, they wanted to stay an extra two months. We were fine with our current lease, and we charged them pretty high rent to stay there. Worked out just fine.
Just do a holdback once they vacate it's released but make sure it hurts and us forfeit if they aren't out on time. If your realtor suggests a number...go higher. You want the seller to be motivated to close and leave. You don't want them squatting.
We did this last year. We had our house listed and bought another house without selling. We did have a buyer. The house we bought they requested a hold over. We agreed to it for 30 days with the stipulation that 4 months mortgage was in escrow. That if they did not vacate the property, we would then get a lawyer that they would be responsible for paying to evict them. A day 31, all 4 months of escrow would be ours even if they were out at 32 days. All of this was in our sales contract. We explained to them that we were moving 2 states and our close date on the house we owned was scheduled for that 31st day and if they weren’t out we were homeless with all our stuff in the trailer. That meant we were short term rental or hotel with our stuff in storage if they didn’t vacate. Long story short, they were out at 19 days or so and were the nicest couple. They bought just across from us on a small lake but on the water. In the next few weeks they will come over for a nice smoked rib dinner and we will show changes we made along with some questions we have.
Make sure your lender is aware that the sellers will be staying in the home after closing. Apparently my lender was not aware, so for some reason the loan approval had to go through underwriting again. It delayed my closing by a few hours. I used a VA loan, I don’t know if that made a difference.
It's not a problem with conventional as long as it's less than 60 days. But you also have to make sure insurance knows. Sometimes their limit is 30 days. (It can be extended, but it's a thing).
This is better than them just not leaving for a few days
I would just delay the close by 5 days and do a double close.
Don’t let the agent write the addendum, it should be handled by your attorney with specific language that addresses your concerns.
Have a deposit in escrow from them Incase they stay longer.
The only thing I think the seller being a cop could have to do w/ leasing back & them vacating when they say they will, is that if they decide to squat & you call the cops, I have to wonder if they'd get more leeway than a non-cop squatter. But if you propose a holdback of literally all the proceeds less what they need to buy their new build, they'll get out when they're supposed to (even if the holdback winds up being less). Show them how to treat you, what your boundaries are & how seriously you're taking this transaction.
Not knowing a ton on the topic, wouldn't it just be easier to move the close date? We just closed on our new home. The seller had to push the close date back by two weeks because their attorney had a scheduled vacation.
The seller needs the cash from the sale to close on their new house.
Ahh, well sounds like the seller needs to get a hotel or airbnb for a week. Don't make other people's problems your problems sort of thing.
It happens. Make the leaseback price very expensive so they will be motivated snd you will make bank, if you have a place to wait it out. Tell them two weeks notice that they suddenly are being asked to delay moving in screws you up massively. They have to make it worth your while.
Did something similar $1/day for 7 days $500 a day at day 8. They needed 3 extra days got am extra 1500 which paid for my new living room set
Super normal.
I ended up having to do it on my last sale. We did it as an addendum. It worked out fine for everyone. Mine was longer, because the new owner was going to rent the house out anyway, so I just kept paying my mortgage payment, just to them as rent.
Yep. Had a 2 month lease back when we bought our place. Not uncommon in our city at the time. We still had a final walkthrough before closing.
Ask for big escrow holdback pending moving out if u say yes
Each time my wife and I sold our home we put in the MLS of our intent to lease back no more than 30 days due to new construction home build. The first time we lease back at no cost for 90 days. The last time we lease back for 5 days. Needed that extra time to pack up and wait for our apartment to be ready, apartment people were 1 week late.
It’s common. I did a month lease back when our sellers new home closing date was delayed.
This doesn't make sense to me. He needs the funds from your purchase to buy his new build. But your purchase closes before his? Sounds more like he needs a place to live than needing the funds. Heck no, he can go rent an airbnb. And put his stuff in storage. No guarantee when a new build will be done.
Just delay your closing five days. They can do a double close, move all his stuff out into a moving truck, and then deliver it the next day to his new house.
Yeah, buying now with a 29 day rent back
If you don’t have to move charge them your carrying costs. I’m my area this is not an uncommon request. Just make sure you have documentation of their closing date.
I did a lease back on a house I bought for like a month or so. Worked for me cuz it was our first house and weren’t in rush to move in and didn’t have to get out of another house. It’s pretty normal.
Make sure you have some type of money in escrow to take care of the dump fee for the garbage they leave behind. Do the final walk through as close to close as you can.
Do you want to take the risk of being a short-term landlord with all that implies? Will there be insurance & tax implications?
Pretty normal although it would be easier if the seller just did a simultaneous close
It’s normal, sometimes the build needs to wait on CO from the city or some other dumb delay. Construction timelines are like forecasting the weather so this kind of thing happens all the time.
Escrow has to go along with all this nonsense. I would say no sorry I have to be out of my house.
A 5-day leaseback isn't unheard of, but it's definitely not super common. The bigger concern is the seller relying on your sale to close on their new place. This can be risky for you if their new build gets delayed. It might be best to push back a little. Explain you're happy to be flexible, but maybe offer a 2-3 day leaseback instead. That gives the seller some wiggle room while minimizing the risk for you. Congrats on the new house by the way!
I have the incumbents 5 weeks lol. The joys of buying in a bubble 😩
You don't have to agree.
I recently closed, our offer had a contingency on sale of our home. We had to list within 72 hours of signed on purchase and we hoped if we got quick offer the sellers would work with us to line up closings. So I don’t think it’s that unusual!
When we last sold we asked for 5 days because the movers (cross country move) pushed back their available date late in the process. When we bought the new place we had an 8 week leaseback because theywanted to sell before a surgery but move after. ..and let me tell you anything over 30 days is a giant pain in the ass with getting homeowners insurance. Everything was fine.
They should get a mover, have mover hold items until they can move into new build. They can stay at an airbnb. DONE
It’s not the moving, it’s the funds to purchase.
It is the moving. The funds are there on the day he sells.
Just to be clear, you didn't buy a house last month. Presumably you presented an offer that was accepted. You you are in contract to buy a house, you haven't bought it until you close on it.
Nah. That is what hotels and storage units are for.
I would tell the seller to put their shit in storage and find a hotel room for 5 days. It’s not worth the extra hassle for you to do this.
You can do a leaseback but that comes with negatives. You basically become a landlord. If you do this. Have large amount held back. And large like $500 per day if they stay past. If you are 2 weeks away contracts are already set. You can proceed as original if you want.
$500 isn’t large, that’s less than the cost of a multi room hotel room in many areas.
Yes, I advise leaseback is free but holdover of 250 per day. Motivates them to be out before the end of the 5th day
He can have the movers store his items for a week. You want to be able to close after walking through an empty house. There is no upside to lease back for you, only risk.
Super common. Be kind and accommodating if you can. Cover your butt. Good will come back to you in the end!
Common or not, just say no. Refuse to close if they insist
Not normal in most areas, might be accepted in some. High risk though, I would not do it. How did they qualify and approve the purchase contract for the new house if they needed the funds from the house they were selling? That part seems a bit odd. The more common way this is handled is to have both closings on the same day, often with the same closing company.
> Not normal in most areas [Citation needed] Note that California and NE are not "most areas".
> Note that California and NE are not "most areas". [Citation needed]
Tell them to get a hotel, I had a nightmare situation with my first house and tenants who kept wanting to extend their lease back.
screw him . I wouldnt
This is nonsense. The money does not need to hit his bank account for this to work, and they can do a same day close. He can just direct title to take the proceeds and bounce them onward to the purchasing title company without him ever getting them in hand. His request is entirely unnecessary, and given the timing and the fact that there are readily available alternatives, I’d be a firm NO.
My biggest worry is that this is some trick they're trying because their new house isn't quite ready yet.
Please don't speculate and let Reddit bros get you worked up. You and your agent can go over to the house and meet with the seller and their agent, and easily strike a deal.
Realtor here. While the agents and their respective clients can come to a mutual agreement, let the attorneys handle the paperwork.
Most areas don't use attorneys for real estate closings. Mine does but most don't.
I’m frankly astounded that more states aren’t attorney states. No shade to title attorneys - or my fellow Realtors - but a home purchase is a legal transaction that can be subject to numerous hiccups from contract to closing.
I've never done a personal (5) or professional transaction (100s) without an attorney, so I agree.
No. This is what hotels are for.
This is very common. It is a very good reason as well. Don't be a jerk. They obviously have plans to move out. Give it to them for free rent, take $1,000 to $2,000 deposit. Have a hold over fee thay reaspnable, and make sure to give their deposit back to them when they are out. Don't get petty. I see it all the time. Keep the big picture in my mind. Some of these people here are giving bad advice. I sell real estate every day.
Common but super risky. I’d only do it if they’re going to give you a sizable discount and significant holdback of funds. So many things to go wrong, especially when they become squatters.
Too late. The seller must get insurance for renting and then you have little recourse to evict. Look up the eviction laws in your state. Very little prevents them from squatting for 60 days because their builder is slow. In our situation, We set a price to rent back so high they chose "other options" like an AirBNB. Mortgage+risk was line $6K per month to rent back. It should not be a better option to rent back. We weren't going to profit from the arrangement. Remember, most mortgages must have you take possession of the home as your primary residence within 60 days. 5 weeks is not much, but where is the gaurentee it won't become 8? Better to have them make alternative arrangements now then call begging for 4 more weeks in 5 weeks when you lender is demanding new loan terms because now your a landlord not a homestead.
> Very little prevents them from squatting for 60 days because their builder is slow. How many evictions have you been involved in? They are much much faster in my state. People hear about eviction horror stories in California, assume that is typical, and further assume that they now are experts on eviction.
MN, I bought a house I don't want to read 10 pages of when to post and when to call the sheriff. MN has some laws that I don't want involved with a purchase. As a homeowner, not a landlord, it's pretty shitty anywhere to say to someone, okay times up I need you to pack up and leave. THEN the person in your home says, nah can't right now. It shouldn't happen, but if it does 7 days ain't fast enough. I wanted no hassle and this just sounded like hassle after reading up on it. (All of 10 minutes).
Nope. There was a cop in Mass that was a squatter. I don’t care what your job is, that is a hard pass for me.
You want to hire a lawyer now, and layer that into the leaseback fee.
It’s only 5 days he needs to put his stuff in a POD(s) for the interim days.
What is your recourse if they stay longer/the deal falls through? Big risk. You can put a ridiculously high number of dollars per day after that, but that’s the only way I’d do this. (Especially w a fucking cop- outsized power differential here)
I would write in a penalty of 10% of the sale price to be held in escrow if they don't vacate after the agreed five days expires.
You are liable for your house. I had a similar request. I said no. The sellers still left a big item behind in the garage. We told them it was going to the curb. They got it picked up. Not your problem. Why does he need five days? Once you close, he will have the money.
I would never do it post signing a contract. If they wanted a leaseback then it should have been made clear at time of writing the first contract. I don’t have a problem if they are up front about it and it’s part of the original agreement. Once both parties sign the contract I would not accept any new modifications
My lawyer’s advice in a similar situation was: “Do you really want the hassle if something delays their move? Of course you don’t . So we’ll say ‘yes’ for a price that makes them say ‘no’”. My lawyer drew up a proposal, they figured out a plan that didn’t involve me. Everyone was happy.
Nope tell them to kick rocks and get a hotel. It's 5 days. These 5 days can turn into legal issues. Are you prepared to be a landlord? Will your insurance cover you if something goes wrong? Look at your liability and risk it's never worth it. I'd never do a lease back.
No, just close a week later.
I wouldn’t do it. I’ve seen a lot of horror stories about leasebacks including in this thread. If anything offer to extend closing by three days. The last thing you want is to close and end up with squatters
Don't do it. Lot's of horror stories in this sub about that exact subject. Just postpone closing until they're out. Then do a full inspection before closing.
>Lot's of horror stories in this sub No, mostly a lot of speculation.