You need to get rid of your property fast. Maybe you’re approaching foreclosure status or there are major repairs that you just can’t afford to deal with. Or perhaps your family has outgrown your home and you can’t stand to wait out a long sale.
You can sell quickly to an all-cash buyer or price your home competitively to attract and eager buyer on the open market. Either way, a fast home sale can lifesaving if you need to liquidate your equity sooner than later.
Except… your sale might close too quickly, before you have another home lined up. You can’t catch a break! Or, can you? Renting back your property might be the ideal solution.
Let’s talk about renting back in California and how it could change the way you look at selling your home sooner than later.
What Does it Mean to Sell and Rent Back Your Property?
First things first, what is a rent back? Simply put, it’s when you sell your property and then rent it back from the new owner for a specified period of time. You transition from being the owner to being a renter, all without having to move.
Here is how it works:
- During the closing process, additional addendums or documents are included regarding the rent back. These documents outline the length of time you will be renting, the rental costs, etc.
- You, as the seller, are responsible for all regular closing costs as well as a security deposit.
- Once the deal closes and you’re the renter, you are responsible for any damage you cause. Likewise, the new owner must take care of regular maintenance, such as a leaking pipe, just like they would for any other tenant.
What You Need to Know About California Rent-Backs
There are some additional things to know before you ask a buyer to let you rent back your property. While renting gives you additional time to find a new home, there are some limitations to this arrangement. For instance:
- If your buyer financed their offer, the lender gets a say. Most lenders won’t let their buyer rent the property back to you (the seller) for more than a couple of months. They likely offered the buyer an interest rate based on them using the home as their primary residence. If they immediately rent it to you for a year, it becomes an investment property. So don’t count on renting back as a long-term solution.
- You need to get the right paperwork in order. In California, if you are renting back for just 30 days or less, you only need a purchase agreement addendum. Longer than that, and you’ll need a residential lease. Because — as we mentioned above — lenders don’t like long rent-back leases, in California you should sell to a cash buyer if you want to rent your place back for more than a month.
- Your new landlord may charge you a holdover fee if you stay too long. Take your new lease agreement seriously. Because the new owner may be (rightfully) eager to move in themselves, they are apt to charge you up to $100 per day if you overstay your new lease.
Are you looking to sell your home fast? Selling fast means you get to liquidate your equity pronto. Renting back your place for a month gives you the opportunity to use your windfall to find a new place, either in Sacramento or a new city. You can close without so many contingencies and have some breathing room when it comes to finding your new abode. Win-win.
If you want to sell fast and you prefer not to have a financed buyer, give California Family Homebuyers a call. We can offer you an call-cash offer and close within a few weeks. We may even be able to work out a rent-back situation if you’re in a bind to find your next place.