Is Sale Leaseback an Option For You?

Is Sale-Leaseback an Option for You?

We’ve been in a seller’s market for several years now.  The main reason for this is historically low inventory available for sale.  This makes it extremely difficult for someone to sell their home and move to another one.  Sellers won’t even consider offers in a lot of cases if they’re contingent on someone else’s home selling.  Sellers who want to purchase another home have had to get creative.  One of the ways in which they have done this is by negotiating a sale-leaseback.

What is a sale–leaseback?

A sale-leaseback in real estate is a transaction in which the owner sells their home and then leases it back from the buyer for a period of time.

Pros and cons for the seller:

Pro: The contingency is gone, so now the seller will be able to competitively negotiate for their new home.

Con: Listing your house as a sale-leaseback will attract fewer buyers.

Con: The former homeowner is now paying rent instead of a mortgage so they are not earning any equity during this period.

Pros and cons for the buyer:

Pro: Many buyers can’t be that flexible with move-in time, so it gives you a leg up if you can accommodate this.

Con: You are now a landlord with everything that comes with that.  You’ll need to have your agent help you put a proper lease in place, including a security deposit.

Con: Ability to move in.  Depending how the contract is written, the timeline could drag on for many months.  To protect yourself against this risk, you’ll want to specify time limit terms into the agreement of sale.

The best way to navigate through this challenging market is by hiring a full-time, professional realtor with a strong business and financial background.  That’s where I come in.  You can reach me at mikegularrealtor@gmail.com, or by phone at 610-718-6937.

Mike Gular, Realtor & CPA

CPASellingHouses.com