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Home Selling Process: Sale Leaseback Agreements

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Homes are selling fast and sellers are getting top dollar.  As a result, inventory is at an all-time low and the market to buy is extremely competitive. So what can sellers do if they want to capitalize on today's high prices but haven't secured a new place to live?  One option as they navigate the home selling process is to enter into a sale leaseback agreement with the buyer. 

“Leasebacks have become an important tool since the pandemic created diminished supply and ever increasing sale prices," says real estate agent Jessica Flynn with Michelle Larnard Real Estate. "This is especially true in the South Shore real estate market where we have very low inventory, multiple offers, and record high sales."

Home Selling Process

The basic parameters of a sale leaseback is a scenario where the buyer lets the seller remain in their home after the closing for a short period of time.  The most traditional form of payment is for the seller to pay monthly rent to the buyer to cover the buyer’s mortgage. In other words, the seller becomes the tenant and the buyer is the landlord. This type of agreement is an option in the home selling process that benefits both the sellers and the buyers. 

Home Selling Process: Leaseback Benefits

For Sellers: 

  • Removes the need for finding a short-term rental and/or storage unit. This is particularly helpful in the South Shore real estate market where winter rentals are limited and summer rental pricing increases exponentially. 

  • Allows them the opportunity to capitalize on the overabundance of buyers in today’s market. Subsequently, multiple buyers means multiple bids for a potentially higher price. 

  • Bridges the time gap if the date when a seller has to vacate doesn’t align with the closing date a seller has for their new property. 

  • Allows seller more time to clean out and move. 

  • Allows seller more time to secure a new property.

  • Allows seller more time to do work/updates to their new home before moving in.

Home Selling Process

Benefits for Buyers:

  • Buyers can purchase a home while mortgage rates are low. 

  • Buyers do not lose any money. In fact, the monthly payment will defray mortgage payments for a short period of time. 

  • Buyers can use this type of agreement to make a stronger offer which may increase their chances of securing the property.

According the Jessica, both her buyers and sellers have found sale-leasebacks very useful. “My buyers have used these agreements to sweeten their offers and secure homes. My sellers have used them to gain additional time to find a new place to live and make the moving process less stressful. In many instances, sale leaseback agreements have been a win-win for all parties concerned.”


Home Selling Process

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