Yesterday my wife and I were taking a walk on our street when we ran into a friendly neighbor who has been thinking of selling her house.
For the past year, this woman has been renovating another home she owns in Laguna Beach, a beautiful seaside resort city where she planned to retire six months ago. But the work on her other property there has been going so slowly that it has forced her to put her selling plans – and life – on hold.
As we chatted, I mentioned an option that hadn’t occurred to her. She asked if I would put it in writing so she could show it to her attorney and give it some thought.
Here is the letter I left at her door this morning:
Dear Naomi,
As I mentioned in our conversation yesterday, a very attraction option for you might be to sell your home with a lease-back. In this way, you would take advantage of the very hot seller’s market going on right now while also having the convenience and peace of mind of being able to stay in your home long enough for you to make the transition to your Laguna property in a relaxed way and on your own timetable.
Here’s how it would work:
We would make sure that a condition of sale would include a lease-back provision. At the close of escrow, the buyer would lease the house back to you for an agreed-upon rent for a certain number of months. You could even structure this so that the lease-back is for, say, three months, with the option of an additional three months at your discretion.
The amount of rent would be completely negotiable. I would push for it to be something nominal, less than the going rate in this area. If we got into a multiple offer situation, which is not uncommon in this market, we could leverage buyer interest in the property to make the lease back rent as low as we want.
A lease back would be no problem at all for developers who, especially if they intend to tear down the house, will have to go through a lengthy permit and planning process with the city. So the house would just be sitting there anyway. In a case where the buyer is taking out a loan to purchase your property, that buyer’s bank or lender might have a restriction on how long the property could be leased back for (e.g., 3 months.) But for anyone paying all cash, which would include most developers and many end-users in today’s market, there would be no restriction on the time length of lease back.
I hope this gives you a clearer picture of your options. If you have any questions about this, or any other part of the home selling process, please don’t hesitate to call. As your neighbor and friend, it would be an honor to help you!