A Tip regarding “Rent Backs” from the REMAX of Valencia CA Paris911 Team of Realtors.
What is a Rent Back?
This is known as a “rent back” and it’s not too uncommon.
Why would a buyer agree?
If there is a lot of activity on a home, regarding offers and interested buyers, sellers can typically get anything they want. This includes asking the new buyers to allow them, for a fee, to remain in their home for a previously agreed amount of time.
“For a Fee”. This is where a buyer can get into trouble. PITI – Principal, Interest, Taxes and Insurance.
This is the “typically” agreed upon “Fee”. This is what constitutes the payment on a Financed Home.
However, this does not include Homeowners Association Fees and Dues. It also does not “always” include “Mortgage Insurance” or M.I.
That is where the trouble can lie. Sometimes, crafty agents representing the real estate sellers are not offering to have the “rent back” cover those additional fees.
Sometimes, this is missed by the agent representing the buyer. Escrow should be a neutral party, potentially pointing out that the buyers are going to have to come out of pocket during the duration the rent back was agreed for.
But, we are not in a perfect world and it’s seems that some people in various walks of life only do “enough” to get by…
Ask Questions regarding Rent Backs
Make sure you are covered if you are going to enter into one of these “rent back” agreement with those you are buying your home from.
Talk with your realtor and make sure, if you have a Homeowners Association, those dues are also included. And if you put down less than 20% you probably have M.I. (Mortgage Insurance) attached to your payment. Make sure this is covered too.
Heck, just ask, “is everything covered with regard to my “out of pocket” expenses for every day I’m allowing the previous owner to rent my home back from me?”
Then ask for a breakdown of what they are paying, see what your payment is, and compare the two.
Keep safe – thanks for reading and sharing.