Renting back from our buyer?

Question

We have a potential buyer for our home that we're still negotiating price with...but they are insisting on an August 31st closing. We want a September 30th closing. Their offer is asking us to rent back from them for a month for $1000. I told my agent that I wanted a traditional closing--where I sign the papers, hand over the keys, and walk away from my house forever. Maybe stay in a hotel for a few days between our selling closing and our buyer's closing on our new house in another state. Clean and simple. My agent kept pushing for it, saying "Lots of people do it..." and "I think you should do this..." I told her that the $1000 rent is money lost to me, whereas I could put that $1000 towards my normal mortgage payment instead if we do a normal closing." She said, "Not much of your payment goes to principle anyway", and I told her, "I have a 15 year loan with a low interest rate. About 800 goes to principle". Am I wrong for being so against this and wanting a normal closing?

We've been on the market only one week, and we have six months to move. So, we're not in a huge rush. I think it has to do with the buyer's financing ending at the end of the month. Can't they just ask their lender for a 30 day extension?? Is that even possible?

Answer 1

Don't be pushed around by an agent, your the one selling it's you're decison. Only a week on the market seems a bit quick?

Answer 2

Depending on where you live, you are very fortunate to have a ready, willing and able buyer. You should really take into consideration your current market and if you feel you'll be able to find another qualified buyer.

It can be very difficult matching two parties needs in terms of closing. It is not uncommon at all for a buyer to request a closing date prior to that of the seller's request. The reason is simply interest rates. They probably have a rate locked in until 8/31 and risk the chance of that rate increasing should they not close at that time.

But if they do need to close by the 31st, they need to find a house ASAP, so it might be in your favor as far as price negotiating. If they are offering you a near full price offer, you should have nothing to worry about. I'm seeing many offers 10-20% under asking - which I'm sure would be more than $1000 for your home.

Also you said $800 goes towards your principle. What is your actually monthly mortgage payment including taxes, interest & insurance? When you pay the buyer $1000, that is generally just their new mortgage principle and interest. They will be paying for the taxes and insurance as well. So in a sense wouldn't you be saving money? You get to live in your home for less than your normal TOTAL monthly payment. Just make sure the taxes are prorated to the date of closing.

Think about it in terms of if you did not have this buyer and it took you 6months to sell the home. How much money would you have spent on your monthly mortgage payment? That's not only money lost, but time lost. That was money you could have been applying to your new home. In addition, since your home could potentially be on the market for a longer period of time, your value could go down from what it is today.

If you think about it in the long term, you might realize, $1000 isn't too much and not really money wasted. Although I do understand the absurdity felt of paying someone to live in your own home.

Best of Luck to you!
Southeast MI Realtor

Answer 3

They could ask their lender for an extension but almost always it will cost them a good amount of money to extend that date. It's probably because of a rate item or something like that.
While you are not wrong for wanting a "normal" closing.. these days there is really no such thing. and I would dare to say 9 times out of 10 closings are pushed back. You would not believe what happens.. heck the seller of the house we bought went to jail the day before closing so we had to wait for her to be sprung.. go figure.
Plus, I am not sure how the market is in your area but you are really lucky to have gotten a buyer so quickly.
And your agent is not blowing smoke folks do rent backs all the time. I understand you point but from what details you have given would it really hurt to do the rent back? It seems your reasons are for the principal of it but practically why not just sell the home and move 30 days later. May be think of their side too, they aren't asking for the sun and moon by asking you to rent.
If you don't feel the amount is fair try to negotiate it, it is probably based on what your buyers mortgage is going to be (at least it should be) Just weigh your options, if you don't you may lose a buyer and your 6 months will come quicker than you think.
Best of luck.

Answer 4

You can't shift around the closing date unless they buyer is a cash buyer. If they're borrowing the money the sale will close within 24 - 48 hours of the funding committment.

If you've only been on the market for one week and if the buyer needs a loan there's zero chance that you'd close on 8/31 anyway. Mid to late September will be much more likely.

The difference in your cash flow will be negligible either way. In today's market you may not have another buyer in 6 months and may well regret being penny wise and pound foolish today.

You're not likely to find a livable hotel for the $1,000 a month and paying $1,000 for a hotel is throwing your money away as much as paying it as rent to your buyer is. If a grungy hotel room is your idea of fun, knock yourself out, but I think you're missing the forest for the trees.

Answer 5

If you don't want to sell to these buyers with their closing date, just reject the offer. It really is that simple. You say that you are not in a rush and you are unwilling to meet their terms, so what is your question really? You have only been on the market "one week" and you are very arrogantly confident in your position because the $800 is so very important to you (I presume this is a a house that has a list price of <$20,000 because anything over that would make an $800 quibble one of the dumbest thoughts since sellers still believing they are in the advantage position in this market), so just say NO. You know what you want, just do it.

I think your buyers are stupid anyway because I would have walked at the first sign of your hesitation, not to mention that I would have charged your AT LEAST $2000/month rent. However, you are very logical & savvy so good luck to you with finding a DECENT hotel to rent for 30 days with a total bill of less than a grand, and I won't even mention the cost of eating out every night for those 30 days, but then again you probably don't eat and put your food budget towards your mortgage principle.

Answer 6

You are in the drivers seat not the agent, sounds like the agent may be getting double commission on this deal. If I were you I would look into who is selling the prospective buyers home and I certainly wouldn't pay $1000 to stay in my own home for an extra month. In fact I would also call the company the agent works for and tell the owner that the agent is preasuring you into doing this and that you are considering replacing them.

Answer 7

A bird in hand is worth two in the bushes. Don't be hasty and loose a qualified buyer over something so small.

It is a common practice to require a "lease back" in this type of situation.

The customer is "always right" in this instance theoretically the buyer is your customer.

Also, you will owe your mortgage company for another month if you stay until Sep., why not just give that to the buyer instead?

Answer 8

you have 2 possibilities- a million) settle for the area and decrease your losses 2) Threaten to place the abode lower back on the industry and pull out in the event that they don't sign and replace on the agreed date. yet another clause you may desire to upload is that no remember if that is not on time they adjust to pay your expenditures for this added week, or you may desire to up the fee by utilising x quantity. the belief-approximately dropping the abode or having to pay extra could be adequate to stir them into action. We have been caught in an identical difficulty as a shopper on 2 events and interior the tip had to sit down down tight for somewhat longer because it grew to become into then a sellers industry. good success!

Answer 9

It's a shaky market; you don't know if you will get another offer. I'd try and hit the date; and maybe offer to split the 1000 bucks down to 500

Answer 10

Do it. In this market you are lucky to have a buyer. Stop looking for perfection and be happy the house has sold.