Rent Back House: More Homeowners Are Aware
More homeowners are aware that they may have bitten off more than they could chew with the ongoing sub-prime crisis. Those who chose an adjustable rate mortgage which either already or will soon begin at a much higher interest rate are suddenly unable to afford the new payments. Bankruptcy, defaulting on the mortgage or just leaving the house and allowing it to go back to the bank seem to be the only options available.
There is another way, fortunately. It's called the "rent back house" option. In the simplest terms, the rent back house idea works like this: you sell your house and negotiate an agreement with the buyer to rent the house from them. The buyer even agrees to sell the house back to you, an additional arrangement sometimes called "sell and buy back."
Rent-back agreements are a "win-win" situation to an extent for all parties involved. The seller stays in the house, which does not disrupt their lifestyle and is comforting. The buyer on the other hand, acquires a steady form of income and real estate and a possibly buyer once their financial situation improves.
This alternative can not only offer help in coping with an unpleasant adjustable rate situation, but can also aid those who must get out from under a mortgage for a number of reasons. Perhaps a marital breakup necessitates their splitting up the home's equity. Or, there may be a problem involving serious debts, there may be health related difficulties, etc.
If you are a seller facing this situation, you should inquire with a realtor or search the web for "rent back house" options. For a transaction of this nature, you absolutely must engage the services of an attorney to ensure that your interests are protected and to help you negotiate the best possible deal.
Consult with a realtor or research "homes on sale and rent back" if you are considering investing in this. This is a "buyer beware" situation if you decide to pursue this. Have an attorney involved and thoroughly check the buyer's background to see if they are reputable before proceeding any further.
An increasing number of homeowners are in dire straits in the wake of the sub-prime mortgage debacle. They can declare bankruptcy, they can go into default, or they can simply walk away and allow the bank to repossess the house. Thank goodness there is another way. You can choose the "rent back house" option. When you sell your house get the buyer to agree to rent it back to you. He may even let you buy the house back eventually. This is called "sell and buy back". If you are considering investing in this option, search under "homes on sale and rent back".
Published December 19th, 2007
Filed in Real Estate
