seller lease backs in a hot market

[Nathan Williams]

I recently had a deal fall through for a SFR purchase in Indiana after a lease back request from the seller. I was frustrated that this desire wasnt communicated to myself and my agent during our communication with the seller agent beforehand but nevertheless I was okay with it and countered their lease back request with a 30 day rent amount that was roughly half of the market rent rate. I thought this was beyond generous yet the seller refused this demanding to not pay.

I hate to see a deal fall through for such a relatively small amount but my gut says if they made a big deal over something so reasonable imagine the issues once the deal closes and I technically become their landlord.

Well anyway, I was curious what is the going arrangement for lease backs in a hot market?  Are buyers really letting sellers do 30 day lease backs at no rent amount??

[Peter Mckernan]

@Nathan Williams this market has brought the seller into the fold as calling all the shots not just a couple of them (i.e. no closing cost coverage), and this means they can and will ask for rent back due to them not being able to find a move-up or move-down property as quickly as their home sales. Due to the low inventory it allows the conversation to be had to get a rent back for free (I have had clients do that just recently, only had a $1,500 security deposit for a $1.2M house), or renting back at the PITI for the new buyers.

The best option for a buyer/seller rent back is the PITI of the new buyer, however, if the seller does not agree to that I would suggest whatever you both agree to that you are comfortable with while they stay there and also have a security deposit held in escrow including the rent. These dollar amounts can be prorated if the lease back ends early.