Need help with a real estate question

[BichonGirl]

*In a sellers lease back the rent is collected in advance at closing by title and can be credited on HUD.
** Per diem lease is based on your total monthly payment, not the sellers.
**For 2 months- get a 1000. 00 deposit- which is held in escrow by the title company- fron the sellers funds.
**ALso- go by your gutt instinct...do the sellers maintain their home well...pride of ownership?
**The last day when they move out, meet for walkthrough & exchange keys- hopefully with your realtor.
**Is a realtor representing you?

**Like said earlier...sometimes " you take a leap of faith"!!!

[austin-steve]

I try my best to avoid lease-backs on the buyer side. They are risky and nothing good can result for you, only downside things can happen. Often, the arrangement benefits the seller disproportionately.

I'd simply say "no thanks" and not do it, or I'd make the listing agent justify the need. If it's simply to benefit the seller, and the buyer assumed all the risk, make sure you are properly compensated. Two months is way too long. Normally, these are done for a few days. I would never agree to two months under any circumstance.

That said, if you move forward:

Charge a full deposit and an estimated PITI+.
Write into the lease that the home and carpets will be professionally cleaned after move-out at sellers/renter's expense.
Write in that the seller is responsible for all repair expenses during the temporary lease, including any deductibles paid to Home Warranty companies. This can become a real sore point when a seller start complaining about and wanting repairs after closing.

As an alternative, consider delaying the close and having the seller pay to lock your loan in at the current rate. This is better than a lease-back as it provides you the opportunity to walk a vacant home prior to closing. Otherwise you become a landlord and are conducting a rental move-out (make sure you know the laws about this also)

In short, if you were my buyer, I'd be looking for every way possible to avoid a two month seller lease-back.

Steve

[gabbarsingh]

Thanks a lot everybody for all your tips and suggestions.
I now have enough points to go back and discuss with the listing agent.
I will let you know how we decide to proceed.
Thanks once again !!

[hound 109]

Originally Posted by austin-steve

....
I'd simply say "no thanks" and not do it, or I'd make the listing agent justify the need. If it's simply to benefit the seller, and the buyer assumed all the risk, make sure you are properly compensated.

Two months is way too long. Normally, these are done for a few days. I would never agree to two months under any circumstance.

Steve

I don't have a comment on the 2 months leaseback (I'm sure there are reasons for the longer request....& would agree the buyer should possibly be compensated for this extraordinary request).....BUT....

....if i was selling my home, there is NO WAY i would sell one in this economic environment WITHOUT a minimum 2-3 day leaseback. I wouldn't move my family & belongings (a 2-5K expense AND a pain in the *ss) out of the home until the mortgage closes & the $$ hits my bank.

At the last minute:

- The buyer could change his/her mind.
- The buyer could lose their job.
- The buyer's loan could be denied (for a zillion different reasons).


Austin Steve, if you're representing the buyer, you're doing your job by not wanting a leaseback...I understand your position....BUT if i was selling my home to your client, then one of us would have to change our position or the sale wouldn't take place.

[austin-steve]

Austin Steve, if you're representing the buyer, you're doing your job by not wanting a leaseback...I understand your position....BUT if i was selling my home to your client, then one of us would have to change our position or the sale wouldn't take place.

I understand the rationale. Having operated in two sue-happy industries (real estate and property management) for 20 years now, and having seen all manner of avoidable squabbles and misunderstandings, I always try to eliminate and remove from transactions those elements that increase liability and reduce clarity.

For a buyer, absolutely nothing beats a walk-through on a vacant property the morning of closing, to verify all agreements were kept (normally professional carpet cleaning and maid service and all items removed from the premises). Rarely do we have problems with that scenario.

To sellers who insist on a lease-back, I simply explain to their agent that every seller encounters the "mover's dilemma", which is, for some brief period of time, a seller has either two places to live, or nowhere to live. If they want to buy their next house first, then sell a vacant house, great. If they want to sell the current house first, then clear out before closing either to temporary or permanent new digs, fine.

But it's not the buyer's duty or responsibility to provide the seller a way to avoid that risk and inconvenience which every other seller must endure. The buyer's purpose isn't to facilitate seller's moving logistics and to arrange a risk-free transition with perfect timing for the seller. The buyer wants and should get a house delivered in good and clean condition upon closing and funding.

That said, if I can get my seller's buyer to give my seller a few extra days to move after closing, I'll do it, because there is little to no risk for my seller, it's all on the buyer. I would never agree to a 2 month layover though. Not unless some big money was involved and held in escrow for my buyer.

Steve

[gabbarsingh]

Some interesting points being presented from both the buyer and seller's perspective. In our particular case, the sellers have a genuine reason (at least it seems that way) wanting to stay till their house closes. On the other hand, we can not delay even a single day after the agreed day of termination of lease.

I have therefore, asked for a 500$ security deposit, from which we will retain at least 100$ as cleaning expenses. In addition, I have asked for the holding over fee to be raised to 200$ in order to avoid the sellers staying even a day longer. All the payment for the lease period + the security deposit is due at closing and we have asked the renters to demonstrate proof of renter's insurance coverage for the 45 day period.

Thanks a lot once again for all your help, friends...

[Connie of Stafford, VA]

Real estate broker here - get one month's PITI as security deposit plus the two months' rent upfront - let your sellers "trust" you instead of you trusting them. They could easily walk out with all your appliances - let's get real people. This buyer is NOW running a business for two months and it should be treated as business. If the situation were reversed, the sellers would be telling the buyers "it's just business." PROTECT YOUR INTERESTS!

[gabbarsingh]

Originally Posted by Connie of Stafford, VA

Real estate broker here - get one month's PITI as security deposit plus the two months' rent upfront - let your sellers "trust" you instead of you trusting them. They could easily walk out with all your appliances - let's get real people. This buyer is NOW running a business for two months and it should be treated as business. If the situation were reversed, the sellers would be telling the buyers "it's just business." PROTECT YOUR INTERESTS!

Good point. That's what we ended up doing..
In addition, we also added a clause in the contract that " they will have to get the house professionally cleaned and we will do an inspection/walkthrough before our move-in date".