Many people have wealth tied up in their property rather than in actual cash. If you’re looking for a quick infusion of money, you may benefit from selling your current property.
You don’t necessarily have to move out after the sale. One of the many benefits of a sale-leaseback, also known as a rent-back agreement, is it allows you to take up occupancy as a renter of a property you sell. We like to think of this as continuing to live in your house, only now with much more money in your pocket. It’s a fast and convenient alternative to tapping the hidden equity of your home for other uses, such as investing in another property altogether or funneling capital into a new business venture.
Here are seven things to keep in mind when you’re looking to make a sale-leaseback agreement:
1. Fair Market Value
You want to get the maximum value out of your home. Your buyer wants the lowest cost possible. How do you determine the selling price?
Say a third party enters the picture to appraise your transaction. If that person has no interest in buying or selling and acts with only a reasonable knowledge of local market conditions, what would they consider to be a “fair value” for your property?
This is fair market value.
Fair market value should play an important role in your leaseback agreement. Use it to help determine the price for which you should sell your property and the amount of monthly rent you should pay after the sale.
2. Terms for Utilities and Maintenance
Your leaseback agreement should address how the property will be cared for and who will be responsible for its utility costs:
- Many sale-leaseback agreements make it so renters must ask permission before modifying or remodeling their homes.
- In most cases, the occupant will be the one paying for electricity, water, and other utilities.
3. An Expedited Closing Time
Presumably, people are interested in sale-leaseback options to get cash out of their homes and into their pockets as quickly as possible. At EasyKnock, our average closing time is just 2 weeks:
- With Sell & Stay, we’ll give you up to 70% of the value of your home in cash.
- With MoveAbility, we’ll give you up to 80% of the value of your home in cash.
You will receive payment once the sale is finalized. With the money in hand, you will be able to cover emergencies or debts and enjoy greater financial freedom to invest in new business ventures.
4. The Ability to Buy Back Your Home
EasyKnock’s Sell & Stay program includes a special option contract that lets you repurchase your home for a price agreed upon in advance. Sell & Stay is an excellent choice if you’re looking to monetize the value of your home without necessarily planning to move. The long-term option lets you buy back your house or choose to move out when you’re ready.
We also offer a separate sale-leaseback option called MoveAbility. MoveAbility is intended for people who plan to move within the year but want extra time and money upfront to help with the moving process.
5. A Verbal Agreement
The sale-leaseback transaction process is straightforward. It begins with a verbal agreement between the buyer and the seller to conduct a leaseback transaction. The general outline of a leaseback agreement should be carefully negotiated in advance to ensure that both the buyer and the seller come to a mutually satisfactory agreement before signing.
6. A Written Agreement
You’ll need a signed contract detailing the terms of your leaseback agreement. The contract should include terms clarifying that:
- After the transaction is complete, the property’s seller will become its lessee, and the property’s buyer will become its lessor.
- The purchase price of the property has been negotiated and agreed upon by both parties.
- The seller warrants to the buyer that the condition of the house at the time of sale has been represented faithfully.
- The full title and ownership of the house will pass from the seller to the buyer after the sale.
- Each party will be responsible for their separate obligations. For instance, the buyer will be the one to cover property taxes and other fees.
- The seller, as the lessee, will be responsible for rental payments going forward and the conditions by which these will be made.
- The seller retains the right to repurchase the house—the contract should make clear the conditions under which this can happen.
7. Someone to Help You Simplify the Process
At EasyKnock, we have a simple online process to streamline your whole transaction. We can summarize it in eight easy steps:
- Visit EasyKnock’s website and submit your information online. We’ll determine whether our services are right for you and schedule a phone call to talk.
- During our initial phone call, we’ll take the time to get to know you and your circumstances and see which of our leaseback programs, Sell & Stay or MoveAbility, is right for you.
- Once we’ve gathered all the relevant information, we’ll prepare an estimate of the financial details for your sale-leaseback, including the money you can expect to receive from the sale and the rental conditions for the property.
- There’ll be a final review of both your application and the contract terms to make sure you’re satisfied.
- You’ll receive a purchase agreement to sign.
- We’ll perform the necessary background checks and due diligence appraisals of the property.
- When everything checks out, a title company licensed in your state will notarize all of the necessary documentation. Our sale-leaseback services are available in all 50 states.
- With the title verified and the purchase complete, money will be transferred right to your account.
After you complete these eight steps with us, your new agreement as a property renter will begin. You’ll be able to move out to a new place, continue living in your home, or buy back your home in accordance with the terms of your agreement.
A sale-leaseback is an excellent way to leverage the value in your home and give yourself and your family more options. At EasyKnock, we pride ourselves on being a real estate technology company that provides you with opportunities to achieve the financial freedom and flexibility that you deserve. Talk to a financial consultant to learn more about whether a sale-leaseback could be right for you.
Visit our website to learn more about our services.