Nash Peters

The Negatives to the Sell and Rent Back Option

With more and more people facing foreclosure due to the fact they can no longer afford the mortgage they have on their home the sell and rent back option has become rather appealing. Although the fact that you could be selling your home for tens of thousands of dollars less than it’s worth, sell and rent back is still a great option for many people, or is it? Let’s take a closer look at the disadvantages of sell and rent back.

While there are several advantages to the sell and rent back option there are also several disadvantages such as the fact that a home owner will be selling their home for less than market value and then whined up paying the equivalent of the new home owners mortgage when all is said and done. Is this something you really want to do?

The companies that specialize in sell and rent back arrangements target people who need to settle their debts quickly, need to relocate right away and those who have homes that are in need of repair and considered to be homes that will not sell. Because of the home owners needs the company has the upper hand and can negotiate the seller’s asking price, driving it way down below the market value. But because the home owner has such a huge need a quick sale is better than no sale at all.

While you will find some companies are companies that want to protect their good name and are acting with good intentions there are always the companies that are just out to make a fast buck off of people who are desperate for a solution. In a sell and rent back situation many homeowners find that there are no contracts that protect them in areas such as rent increase and the length of time you can rent the home. If you need to use the sell and rent back option make sure to get everything in writing. Without a contract you could be left homeless or with higher rent than your previous mortgage.
You should also be well aware of what the buyer plans to do with your home. Many smaller companies that specialize in sell and rent back arrangements often only hold on to the property for a small amount of time and then sell it to another person. This could mean that at the end of your six or twelve month lease you could find yourself looking for a new place to live. Is all that worth it for a few dollars and selling your home below market value?

For some people the sell and rent back option is a good way to find a quick fix to their financial issues. For others the sell and rent back plan might just be the beginning of a long road of issues and unforeseen problems. Just make sure to weight your options and get everything in writing. Consulting a lawyer during your sell and rent back discussion is advisable.

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