Dear Monica: We want to make an offer on a property and the agent has told us that the seller wants a “rent back”. How would this work? Meredith G.

 

Dear Meredith: Rent-back agreements are very common in today’s transactions. A rent-back agreement gives the seller the right to stay in the property for some period of time after close of escrow. Sellers like this because they can be sure the sale is going to close before they have to clear all of their things and commit to their next property, whether it be a purchase or a rental. Buyers have become used to allowing rent-backs because the market has more or less required that they be flexible on this.

 

Buyers can offer the sellers a “free rent-back”, i.e., not requiring any money, but keeping only a security deposit. Or, buyers can charge market rate rent for the period the seller remains in possession. If a rent-back fits with your needs and timing, sellers love them and offering this may give you a competitive edge when making your offer.