The Pros and Cons of a Leaseback Agreement When Selling Your Home

Want to sell your house and live in it too? You can with a residential leaseback agreement! Leaseback agreements allow homeowners to sell their home’s and acquire liquid capital while not having to deal with the hassle of moving.

Although this business tactic is most popular amongst investing tycoons and companies it can also be applied to your home. Keep reading to learn more about the pros and cons of a leaseback agreement.

 

What is a Leaseback Agreement? 

A leaseback agreement is an arrangement where the company that sells a particular asset is able to lease it back from the buyer. This tactic is also referred to as a sale-leaseback because it allows a company or entity to sell an asset for immediate capital, while they slowly can lease that asset back from the buyer.

Although this tactic is popular amongst large conglomerate companies to quickly raise funds for expansion, it may also be beneficial for the everyday homeowner. Residential leaseback agreements allow homeowners to sell their homes while still living in the property. This can help alleviate ownership costs.

Advantages of a Leaseback Agreement

Andrew the Homebuyer is eager to help you sell your house before you buy your next one. The liquid capital that comes from the initial sale of a leaseback gives owners the ability to invest or expand. This financial security can be a relief, even if you are looking to buy a new home in the near future.

It typically takes less than 30 days to receive the payout from selling your home with a leaseback agreement. This speedy turnaround time can be helpful if you are strapped for cash or eager to make a larger investment.

Thankfully, your monthly expenses are not expected to skyrocket when you start paying rent. Typical rent for leaseback properties are comparable with the prices of nearby homes.

Disadvantages of a Leaseback Agreement 

This agreement is not without flaw. As a tenant rather than owner, you do not benefit from the appreciation of your home. If the value of your home goes up in value the company you sold it to will reap those profits.

Even with the leaseback agreement, you will be responsible for paying closing costs and fees for the real estate transaction. These costs can vary however, some of your money from the sale would be redirected to these fees.

Determine if a Leaseback Agreement is Right For You

It is important to weigh the pros and cons of a leaseback agreement for your financial situation before making a commitment. By allowing homeowners to seize the capital from a sale without forcing a move, leaseback agreements offer the best of both worlds. If you need to finance, you should look into the viability of a leaseback agreement for your home.

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