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Debbie Reynolds rate lock is an issue if it takes longer than 90 days for closing. Rent back is the best idea - do not need to wait for closing for 90 days.
However, there may be different guidelines - some lenders do not allow more than 2 months for rent back. Please check.
Morgan Hill, CA
In MA, I think the law allows 60 days only..
That sounds like the best solution to me.
Morgan Hill, CA
What happens, as did in our case when we bought our house, that we wanted to move in on the day of closing?
It depends on the situation, in todays buyers mkt we are seeing these often.
My first choice would be to delay the closing.
im just clicking back through some of the old Q and A's, looks like this one got lots of good answers.
90 days sounds like an awfully long rent back. What is the reason for that length of time?
I've done that, Debbie, when a buyer wanted to lock in his financing and rates. It's like a lot of what we do--find solutions to problems to get houses to the closing table.
There's some pretty spirited discussions here. I would probably do it.
I would try to avoid a rent back if possible. Most people want possession on the day of closing and have scheduled their lives around that.
If the buyer is getting a loan you need to see if the lender will allow that first. If it is being bought as a primary residence the lender probably will not allow more than a few days.
Carla Muss-Jacobs, Principal Broker/Owner ...I am 100% clear of my responsibilities as a licensed broker in California. What I am unclear on is why you think it's ok to scold and attac me. I've been under the perhaps false impression that this is a plae for the spirited sharing of ideas. I have read others who feel similarly about rent backs, yet I don't see you attacking them.
If I were a buyer, I would never agree to a rent back arrangement. It is too difficult to evict tenants when they default.
Rent-backs are sticky situations and ones that should be avoided at all costs. Another option for these (especially in a renter moving into their newly purchased home) is to have the seller pay for an additional month rent for the buyer.
Hi Debbie -- interesting question and spirited comments.
The answer depends on a couple of different factors and it becomes a part of the negotiation scenario. It could limit the buyer pool of a property and that's typically not ideal. As some comments have suggested, there can be both lender, insurance and legal concerns but those can typically be worked out.
As Carla Muss-Jacobs, Principal Broker/Owner commented and I summarize -- we are not the principals in the transaction so our duty is try to get the client what they want as long as it is legal and ethical.
We have rent back agreements already prepared in my local market. And Jeff Pearl there is a maximum for a rent back for owner-occupied purchases. It's 90 days in my local market and standard of practice. Tey are not risky if done correctly. A knowledgable, experienced real estate agent can . . . and does . . . use them. It's not up to USE to NOT inform our clients about an option available to them that is in their best interests. It's up to the clients if they want to OFFER / ACCEPT a rent-back as part of the terms and conditions.
Cindy Davis . . . it's not about what you like. It's about what works for your clients. You are a fiduciary and therefore have a duty to your clients. You don't NOT suggest something to your client if it will benefit them. I you don't like rent back then you shouldn't take a listing, i.e., represent the seller, if that would be in their best interest and you're not comfortable. Geez . . .
There are reasons the seller can not give possession, I'd assume. And with those reasons then it becomes a negotiable consideration. While one solution would be to have a 90-day escrow where, at the close, buyer is entitled to possession. but there might be issues with buyer's interest rates, etc. Or, in the alternative to a 90-day escrow, the buyer and seller negotiatate a rent-back. These things are part of the overall purchase and sale, which are often protracted in nature, but workable. I've done plenty of rent-backs and have actually used this provision to make my clients offer more attractive to the sellers.
I agree 100% with Praful Thakkar. It would behoove the buyers to agree in light of rate lock.
Rent backs are risky, and most lenders here limit rent backs to 2 months max. There can be legal problems if rent back it too long because it can be looked at as an investment property instead of a primary residence.
That's a long time to leaseback. A lot can go wrong in 90 days.
Part of due dilligence is letting the seller know all of their options.
I have done it in the past with my clients but these days lenders are strict so buyers will have to check with their lender as well.
I'm with Cindy Davis . Luckily this doesn't come up often but I try to discourgae such things but I also understand that it happens. Looks like a rent-back is the best thing...
Hi Debbie. If I were representing the seller, I'd want it closed sooner rather than later. If I were representing the buyer, it would depend on their circumstances.
Always! Unless it is part of the negotiation. The rent should be at least equal to the total mortgage payment of the buyers
It depends upon what is usual in your market....they are severely limiting the number of buyers here if they do that....and should consider their alternatives.
Good morning Debbie. A lease back is fine if the agreement is properly drafted, a large enough security deposit and the buyers have the ability to stay in their current housing.
If the buyer wants to move in, yes. But only with the rental agreement handled outside of the purchase contract.
It would be the best solution. But sometimes, a buyer has a reason to have a longer escrow as well. Good luck!
Yes, absolutley! Why would they not want to move for three months? I would rather push out the closing.
If all else fails, yes, a rent back with a hefty security deposit.
I personally wouldn't suggest it since I don't like rent backs. I think the legalities of liability can get very tricky. I would probably wait awhile before taking the listing.