What Is a Leaseback? How to Sell Your House Without Moving Out Right Away

What is a temporary residential lease or a lease back in a home buying and selling situation? If you're tuning into our series, there's a downloadable here that shows you what it's like to buy and sell at the same time and what that whole process is. And there's a whole video series attached to this. But today, right now, we're talking about what is a lease back? Real estate agents talk about it all the time. Mortgage lenders sometimes, title companies don't necessarily love them, but they're able to help us deal with them. What is it? Okay. So lease back, in some ways, is a reference to one type of temporary residential lease. So usually when you're buying and or selling a house, we don't want to lease. We're buying. We want to own it. We want to sell the one we've got and buy the one we want, and that's it. But a lease back is when, if I'm selling my house to you, I'm going to sell it to you. Close. Execute. Complete. Finalize that transaction. Now you're the owner. There are situations where I want to lease it back from you. We call that a lease back, meaning I sold it. We've closed. We funded. We're finished. You own it. Now I haven't moved yet. I don't own it anymore. Now I'm just a tenant. I'm leasing it back from you. You have all the money, which is what you wanted, and I didn't I didn't have to move immediately, which is what I wanted. So it might be. And this is often the case that we've done this so that I have a little bit of time to move into the next house or close and fund on that next house or whatever. So I've sold it to you. I've got my money out of the house. You've fully paid for it. Now you're the owner. I'm a renter. Sometimes I'm paying you to rent it from you. Other times we might have negotiated a free one. So let's break down some of those things. Why would I want a lease back? Or why would you let me lease it back? It might just be a term that was required for me to be willing to sell it to you. I'm only going to sell it to you if you let me stay for a week or two afterwards, paid or unpaid, doesn't really matter, so that I can get my ducks in a row for my next move. It may be. That we both agree that we trust each other. This deal has gone really well. And it's just something that helps both of us be a little bit less stressful about things. You know, you fully own it. Everything's rock solid before you pack up all your stuff to move. I know I have all of my money and I'm able to stay a while before I get finalized on my other side. So it just helps both of us be a little bit more stress-free. Gives us a little more time to clear up our moving. Okay. The other thing is there's a couple of main terms to a lease back, meaning like, like elements that we need to negotiate and work out. Number one is the length. Normally these are measured in weeks, not months, certainly not years where it's like, Hey, I sold it to you. You own it now. And I'm going to stay for three weeks before. I have to relocate to another city or before my job is finished or before my house is ready or you are willing to go ahead and buy it but you don't really need it for a month or two but there's a reason that worked out for us. So some of that is the length. The other thing is how much rent or lease payment. I already explained that there are certain scenarios where there's no money being exchanged. It's just rolled into the purchase price. It was one of the terms that allowed us to agree on the bigger terms of how much, when do we close, and all that jazz. There are also times where you might say, I will lease it back to you as long as you pay me what it's costing me. So I'm going to take my rent, I mean, my mortgage payment, my principal, interest, taxes, and insurance, and I'm going to prorate that on how many days are in the month. So you're going to stay for 21 days. You know, my per day rate times 21 is this. You just cover my cost. There's other times where you might be making money and it may be worth it to me to pay you that to not have to move twice and store all my stuff and pay movers two times. So I might pay you a premium just to get to stay. So the length of the lease, the amount of the payment, and then And then the responsibilities, literally. Who's in charge of the electric bill, the water bill, mowing the yard, insurance, and those kind of things. Normally I would then get renter's insurance and I would keep maintaining it the way I did as an owner until I move out, but all that's negotiable. So those are some of the key terms and details of a lease back. We already talked a little bit about why they would be free sometimes. So the last thing I want to talk about is really when they're most helpful. Like most of Most of the time you don't want to do this. You just want to clean, I bought it, you moved in, I moved out, everybody's happy. But sometimes this is important when there's a simultaneous buy-sell. So I'm selling to you and I'm buying over here. But if there's a delay in either one, I might end up being homeless or having two houses, so I want a little bit of a lease back. Or you maybe willing to buy, but you don't need it for a while, so it's the opposite of simultaneous. It's like there's a big delay and we can bridge some of that gap with the lease back. So hopefully this is helpful. This is actually really confusing to a lot of people and I want to add one little bonus. There's a different type of temporary lease And that is when... The buyer rents the house from the seller before they own it. So I don't live in my house anymore. I've already moved or this is my second home and I might, I do not recommend ever doing this, but I might for some reason be willing to let you move in and live in my house before you bought it and before you own it. 99% of the time, I think these are a really, really bad idea, but I did want you to know that they're a thing and they're possible and they could help you in a rare scenario when you're selling and buying at the same time and you need to access or live in a property before you own it. So hopefully this is helpful. Check out the rest of the series and definitely download our resource. It might be linked up here above. It's definitely in the description below that can walk you through the whole process of selling and buying at the same time. I'll see you on the next video.