Need Advice: Rent Back after buying house in Bay Area

Thinking of buying a property in South San Jose Area. They want to close the deal in 1 month but the owner wants to stay in the house for the next 3months since the house they want to move into will only be ready by that time. What are my risks/options here? Anything particular to keep in mind while signing the seller rent back agreement for 3 months.

Are we talking about the same house?

Did that twice, didn’t consider risk because I want to win the bid! Charge market rent.

1 Like

Did you have a separate rental contract?

Looking for another deal since previous one doesnt seem to be going anywhere!

1 Like

No, part of the bid. Seller asked for 3 months, my realtor recommended a rent, seller decided only 1 month, immediately handover, I rented* out at 20% more :slight_smile: Seller and his agent don’t know market rent. Multiple bids for rent!

  1. Lender needs to be aware of rent back or can it be done outside ? This is for 3 months
  2. What role does escrow Play if at all ?
  3. Will escrow hold money until they vacate ?
  4. Which form would u recommend to sign… PRDS , CAR seller in possession, CAR RLAS

If lenders know of 3 month rent back, do you need to buy as investment property?

1 Like

Looks like it still a sellers market. You seem to be running into very reluctant sellers.

1 Like

Last time I checked, most lenders doesn’t like rent back fore more than 2 months. So make sure you check on that. Second to make sure there is clause in there to charge them huge amount of rent if they want to extend or didn’t vacate. Things can get delay on their new house side so you want to cover for that.

1 Like

I did a small rent back. It has a wicked rent increase after a few days to makes sure it was only a few days. I thought the mortgage paperwork requires you to occupy the home within 30-days if you’re buying as a primary.

Four years ago I agreed to a 2 month rentback to the sellers when I purchased my house in S San Jose. It was the norm at the time and, among other terms, ensured my bid was chosen by the seller. Lender was OK with two months, but not more. Sellers were on the level and got out a couple of weeks early which helped with my getting some upgrades completed before I had to move out of my old place.

1 Like

Need to ask your mortgage broker if this is ok. As Boolean said, there’s a time limit on the rent-back befoe the mortgage is considered a rental rather than Owner-occupied